Capital Allowances on Franchise Fees

Capital Allowances on Franchise Fees

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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

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By User deleted
30th Jun 2006 08:49

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

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the sea otter
By memyself-eye
28th Jun 2006 10:54

none
I started as a franchise and was only allowed to claim the physical assets and some of the training (the ongoing bit)

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By Ken Howard
28th Jun 2006 11:23

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.

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