The split between goodwill and value of assets when buying and selling a small business are often areas for negotiation dependent upon CA's already claimed by the seller and his wish not to initiate an additional tax charge upon cessation where all or most CA's have been claimed. Is there any situation or legislation that allows the purchaser to include the actual value of assets purchased, where this is higher, rather than the the agreed valution in the sale document thereby allowing him to claim more by way of CA's?
There is no property or fixtures involved and the buyer and seller are not connected persons.
Any replies would be welcome.
Replies (2)
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Difficult
It's an area I never really got involved with; it always seemed more complicated than it needed to be.
My guess is that you are stuck with the allocation in the purchase agreement. To do other would open the door to asymmetric treatment, eg, seller gets tax-free/tax-favoured proceeds; purchaser gets large capital allowances.
Put it another (completely non-technical) way, the agreement says those are the values, agreed between vendor and purchaser, so how could you now argue otherwise?
I'm afraid the time for such discussons is when the price and contract are being negotiated.