Write off of initial franchise fee before period ends as no ongoing value, can losses created be used against future trading?
My client bought a 5 yr training franchise, with upfront payment, which we were writing off over the 5 yr period of the franchise. My client operates as a limited company 'x' ltd trading as 'y' franchise.
After 18 months he was getting no income or business via the 'y' franchise and has written to the franchisor saying that he wishes no longer to use the franchise name. The client is trying to get similar work though his own name and contacts but no longer wants to be tied into paying the franchisor the monthly %age of all income when it is not derived through the franchise.
A verbal agreement has been made with the franchisor that my client can cease to operate under the name, but there is no real prospect of my client getting any of his initial investment back.
I therefore wish to write off the remaining franchise value at the end of the 2nd yr as its UEL is now over. This will create a fairly large loss. (There are already losses brought forward but there are no creditors except for a directors loan so I am not too worried about the trading insolvently aspect.)
Can the loss created be carried forward against future training profits even though they will have nothing to do with the original cost that we are writing off? I would assume it can as it is part of the same trade but would be grateful for confirmation.
- Limited company built a property and the client has made this messy 228 7
- 2012 13 HMRC QUERY 528 9
- Transferring rental property to limited company 450 14
- Are there Sage Instant Accounts Plus report which give breakdowns of the debtors and creditors control account balances by invoice for each currency? 72 3
- Time recording 107 3
- HMRC Funding for Employee PAYE refund 252 4
- Paying dividends to Ordinary shares with different nominal values 114 2
- Land Registry 267 3
- How did you recalculate your payroll fees 960 13
- Auto Enrolment 667 4
- Separate companies same Director buy from each other 800 19
- Company Number 10000000 372 4
- Advertising Tips? 308 7
- Auto enrolment confusion 1,515 29
- IR35 362 5
- Exclusion of single director companies from the Employment Allowance in 2016/17 421 12
- Revenue phishing examples 240 1
- iris update 11.9.2 212 2
- VAT Box 7 and supplies from unregistered traders 452 13
- 2015 tax year end 543 1
- Self employed and HMRC Worldwide Subsistence Rates 733
- Interest paid - do new rules affect Tax Credits? 432
- Self employed consultant working in Ireland 374
- Costly Accounting Software contract 366
- Directors' advances and credits 283
- Market Invoice (P2P invoice discounting) tax treatment 260
- DTA tie-breaker issue 251
- Tax on internet ad sharing income 233
- Credit against UK NI for NI paid to EEC Countries 210
- CGT for NOn UK residents 195