Purchased Goodwill Treatment For Unincorporated Business- Sole Trader

Purchased Goodwill Treatment For Unincorporated...

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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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By User deleted
16th Jun 2014 16:42

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.

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By ATAX Accountants
16th Jun 2014 17:58

Thanks

@BKD, Thank you for response. Since, Financial Reporting is changing rapidly therefore, it is prudent to treat every transaction correctly first time to avoid HMRC questioning you afterwards.

With regards to other comments, I would like to say we all are humans and likely to make mistakes regardless of the fact whether you are a bookkeeper or an accountant. 

 

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