Tax relief on Goodwill amortisation

Tax relief on Goodwill amortisation

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A client incorporated a sole trader business (started April 2003) and a goodwill figure has been agreed with the Shares Valuation Office at the IR. The intention is to write it off over 10 years. Is the Goodwill amortisation allowable against the profits for CT purposes ?

Thanks in advance  

Replies (8)

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By User deleted
09th Sep 2011 14:49

I believe not ...

... I think you can only to that if purchased from an unrelated party, but willing to be proven wrong.

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By debstax
09th Sep 2011 16:06

Goodwill created after 1 April 2002?

I think that provided the goodwill was created after 1 April 2002, then amortisation is allowable for CT purposes.....

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Teignmouth
By Paul Scholes
09th Sep 2011 16:26

Looks OK

Per CTA 2009, Pt 8, goodwill ok if:

It was either created after 1 April 2002 or acquired after that date from a person who was not at that time a related party or, if it was acquired from a related party after 1 April 2002, that the related party itself created the asset after 1 April 2002 or itself acquired the asset after that date from a person who was not a related party.

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By User deleted
09th Sep 2011 17:11

Thanks Paul ...

... I'm obviously rusty on that one: gosh I feel old if it is that long since last dealt with one! :o)

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By aj.adams
09th Sep 2011 19:13

Many thanks.

Is this the only asset on which the period over which the tax relief claimed is decided on by the claimant themselves ?

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Teignmouth
By Paul Scholes
09th Sep 2011 19:49

That and other intangible assets

This one applies to goodwill & other intangibles such as patents, trade marks, Itell. Prop. in general but there are some excluded intangibles.

Other than that I don't know of any other reliefs for a company that depend on the personal ownership of the transferors and hope there aren't any!

OGA - just good timing, did one for a partnership a couple of months ago, business started 1998 so a no go.

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By aj.adams
09th Sep 2011 22:20

Thanks again Paul

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By andrew.hyde
12th Sep 2011 11:42

Care needed

To qualify for relief on the amortisation, the goodwill must be within GAAP (see S715(3) CTA 2009). FRS 10 for example.The fact that you've agreed the value with Shares Valuation Division suggests that the goodwill is either

inherent (usually in a property, in the way that the right to bridge tolls can't be separated from the bridge) orpersonal (take a mobile hairdresser as an example)

So possibly not FRS 10 or equivalent.

It's not quite correct to say that tax relief claimed is decided on by the claimant themselves, because FRS 7 applies fair values and legislation applies market value for related parties.

S884 CTA 2009 determines time of creation for goodwill. If as is suggested the business did not commence until 2003 then that aspect at least is OK.

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