Hi,
Company acquired a shop in 2011 including goodwill and property. They also have acquired several other shops since within the same company. The first shop is now being sold - with a loss on goodwill. Can anyone please explain the treatment of this loss - can it be written off as a P&L expense against all trading profits for all shops? Only against the shop being sold? Or only against non-trading profits? Other answers online are a bit ambiguous so hope someone can help!
Thanks
Replies (3)
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I assume that the goodwill was acquired from an unconnected party and that tax relief has been claimed for amortisation (with no fixed rate election).
Whether or not amortisation has been claimed, the goodwill will have a tax written down value, which will form the basis of your tax gain/loss on disposal. Gain or loss is treated as a trade item and therefore treated as income or expense in computing trading profits/losses, ie tax should effectively follow the accounts.