Strange goodwill LLP tax planning case

https://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j12886/TC%2008977.pdf

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I'm struggling to work this out. It looks to me like goodwill has been conjured from thin air here re the LLPs. Perhaps that was the clever tax planning by Alan Pink (if so, there was always a distribution risk)?

https://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j12886/TC...

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By Justin Bryant
01st Nov 2023 11:40

Also, this was overlooked/not addressed:

"(b) Internally generated intangible assets
This is where the standard starts to get a little controversial. Generally, internally generated intangible assets cannot be capitalised. The reason that internally generated intangible assets often cannot be capitalised is that it is difficult to establish the true benefit from the asset or even to establish specific costs that can be attributable to items such as brand names."

https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamen...

https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-...

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paddle steamer
By DJKL
01st Nov 2023 12:07

I do agree that arguing self generated goodwill was not on the company balance so therefore does not exist within the company appears somewhat strange, one would surely never expect such goodwill to be reflected on the balance sheet in the first place.( Unless accounting standards have passed me by, I thought only goodwill arising from business combinations was disclosed)

I also find it strange that the goodwill is considered not to belong to the company but to the individuals notwithstanding that presumably the activities and resources of the company were used to create it over the years.

It is a strange case, as you remark, and totally at odds with what I would have thought the position to be, whilst the IFAs were registered as individuals they were presumably not reporting any income as IFA sole traders to anyone, yet the goodwill is their asset. (Wonder if it could be applied to incorporated accountants??)

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Replying to DJKL:
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By Justin Bryant
01st Nov 2023 13:49

Yes and at least no harm done this time, unlike in other recent crazy, bonkers FTT judgments.

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By Justin Bryant
08th Dec 2023 14:24
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