I would appreciate if anyone kindly advise as to how purchased goodwill by a sole trader should be treated? The scenario is that one of my sole trader client has paid 23K towards goodwill and £5K towards plant & machinery. It is a small Dry Cleaners business which has been sold and bought by sole traders. Now I have the following questions:
1- Is he allowed to claim capital allowances / Annual Investment Allowance on second hand purchased assets?
2- How the purchased goodwill should be treated in his accounts as he is a sole trader?
3- Is it possible to claim business tax relief on purchased goodwill?
I sincerely thank you for your support.
Kind regards
Muhammad Ahmad Tahir
Replies (2)
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Answers
1. Yes (AIA assuming seller and purchaser unconnected)
2. As an intangible fixed asset
3. No
But I do hope that you're a book-keeper. No accountant acting for clients should be having to ask the above questions.