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.
- Freelance software consultant 257 3
- Tax Penalty overeaction 469 8
- Tax deduction for Partners for items outside of accounts 130 1
- Tax Enquiry - Inspector Error 143 1
- opening balamces 322 11
- Welcome to the Saturday Club 705 35
- Limited company closed payroll then changed its name: does it need to apply for a new PAYE reference to reinstate payroll? 280 4
- anyone using Office365 for practice management 700 18
- What is included in earnings for Carers Allowance purposes? 93 2
- payroo 190 3
- Which P45 to Use 266 3
- Auto enrolment 1,585 25
- PCP Car purchase 142 2
- New Boiler at Rental Property 134 1
- Is it possible to offset part Class 4 losses for year from one business against part profits of second business 91 1
- Can I undertake a solicitors audit? 156 3
- losses carried forward 290 7
- No UTR 257 2
- Daft state pension question 326 5
- E-signature on paper tax return 165 2
- Form MR01 (Particulars of a charge) - does this need to be filed if you remortgage with the same lender? 770
- Copy Wanted 482
- Did you realise Google will not patch android exploit ... 446
- Underpaid VAT assessment and relation to SATR 442
- Latest phishing scam 269
- Entrepreneurs' relief 256
- Limited Company Garden Office - Minor Personal Use - BIK 254
- Corporate LLP with 30 June Year end - How to record on SA800? 239
- Supply teachers and Ltd Companies 219
- Cashback for opening business bank acct = trading income? 217