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.
- Gift to employee 326 8
- You think HMRC are inefficient? 412 7
- I hate HMRC's voice recognition system - The Inept Interrogator 1,091 22
- Company Pension Contributions 2013/14 45 3
- Investment property where tenant lives rent free 388 8
- VAT Cross Border Invoicing 92 2
- Sage Import Data 280 6
- Slight twist on employment related securities 231 1
- Child and Working Tax Credits and sudden increase in investment income - does this trigger a claw back? 64 2
- Best time software for small practice? 187 2
- Residents Association Corp Tax 308 13
- private to company car? 353 9
- Which address 988 11
- Profit accruing in fiduciary or representative capacity 88 1
- Do I charge VAT for event I held in Paris 256 5
- PAYE Refund Farce At HMRC 952 15
- Car maintenance costs deductible against CT 252 6
- Does anybody still use a Filofax? 465 17
- Vat threshold issues 444 10
- Sale of an investment between group companies 161 7
- DTR : TIOPA 2010 Section 42 471
- CTA study material 450
- Sect 102 TMA 1970 323
- Pre incorp expenses 301
- Relief on French Tax Deposit? 260
- Anyone have clients that use Pay4Later to offer customers credit? 248
- What is the tax position if I am working overseas but via a UK agency? 202
- Gift Aid after 5 April, before 31 Jan - Tax Credits 145
- Anybody have that old ACCA Student Training Record (STR1) 133
- Taxation of partners in an LLP following new rules 128