When a franchise fee has been paid to purchase the 'name of a chain' business such as McDonalds, what capital allowances are allowed to be claimed for the first year and on going years?
Nicola Aissaoui
Replies (3)
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Some training costs disallowable
HMRC is likely to disallow training costs if the following two conditions are BOTH present:-
1) Training is NOT for an employee
AND
2) Training results in the the individual gaining NEW skills or knowledge
To be allowable ONE of the following is necessary :-
a) Training costs of an employee (eg. director of a company, NOT a sole trader or partnerin the business)
OR
b) The knowledge gained is not "new" but rather updating of existing skills for the sole proprietor or partner in the business
none
I started as a franchise and was only allowed to claim the physical assets and some of the training (the ongoing bit)
What assets are you buying?
You need to breakdown the franchise fees into what you're paying for.
Equipment - claim capital allowances
Van - claim capital allowances
Training - claim as expense
Stationery - claim as expense
Advertising - claim as expense
Other "revenue" costs - claim as expense
Goodwill (Balance of fee over the underlying products or services) - If you are a limited company, you should be able to claim the balance as goodwill under the new goodwill tax relief rules.