Corporation Tax relief on Goodwill write off
My Client owns 21% of an LLP. He is selling part of this holding to a Limited Company (which he has 100% control over), so the transaction is 'not at arms length'.
The Partnership share comes with rights to a guarenteed monthly drawing of £7,000 and the asset is valued at £200,000.
My Client is of the opinion, that he can write down the value of the intangible investment over 25 years, or even less. He has had advice from a financial advisor suggesting that the income received from the monthly drawing can be offset against the write down cost of the investment , thus no CT.
I have told him this advice is incorrect, as Intangible Asset w/downs are not allowable under CA relief. He has suggested that under CTA2009 (S728 onwards) there is the provision for obtaining tax relief on such write downs.
I have suggested that at best this relief would offer 4% per annum relief and this could not be justified as transaction not at arms length and there is no finite end to the monthly fee payment so there is little arguement to devalue the asset.
Even if all this wasn't relavent, the relief (at 4%) would only equate to £8k which would not put a dent in the £84,000 minimum income a year from the investment.
Unfortunately this is one of those Client's who reads a bit of information regarding Tax legislation, finds a bit that justifies his actions then will not budge from this position. If I am missing something I would appreciate a steer.
- Double tax treaty Italy and UK 85 1
- Anyone Heard of This Outfit? 1,097 7
- Increasing the personal allowance: A top priority? 462 17
- Bereavment payment 60 1
- Can anyone advise on the best VAT Scheme to change to? 266 4
- Apologies for reposting this but first post was on Friday afternoon! 339 2
- CT600 Computations - Company Tax Return help 1,291 14
- Sage Bank Reconciliation 141 2
- Companies House incorporation service 341 12
- Factors affecting tax charge FRS 19 (marginal rate) 71 1
- P35 and Service Company questions 145 3
- VAT chargeable to conference attendees 191 6
- Is Accountancy Becoming like an Insurance Policy 197 1
- Long period of account for Corporation Tax 258 7
- Flat Rate VAT and EU sales (Non VAT) 139 3
- NIC £2000 Allowance - Care Support Worker 148 3
- VAT, vans, sole traders and business use. 1,598 12
- Share Capital 127 2
- Trading income or not? 191 1
- Charge HMRC 419 3
- Xtuple 546
- Qtac payroll for bureau 375
- Confused - Professional Association a Mutual trader, or not? 316
- Industrial & Provident Societies 313
- Why would HMRC offer to close an investigation by contract settlement 290
- CIS schemes 221
- Domain name sale and limited company 205
- Investment 185
- Director legal fees in loose connection to the company 184
- Italian friend wants to set up a UK company to reduce taxes 178