Tax treatment for purchase od client database

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Hi, I am looking for some advice regarding one of our new clients. He is a sole trader who runs a window cleaning business. Our client has recently purchased a client database from another business for £16,000.00 (4x £4,000.00 - the seller was able to generate £4,000.00 a month in revenue using the client database). The seller introduced my client to his customers. My client took a personal loan to pay for the client database. Am I correct in treating the £17,000.00 as Intellectual Property within the know-how category and applying a 25% writing down allowance?Thank you for you help

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By Bobbo
08th Dec 2023 15:27

Your client hasn't bought 'know how' though have they?

What have they bought? Have existing contracts between the seller and their customers been transferred to your client? Or has your client simply paid £16k for the seller to say to each one of their customers "hi, i'm stopping window cleaning but this is Steve and he cleans windows pretty well so maybe he could clean your windows now".

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Replying to Bobbo:
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By Kate2843
08th Dec 2023 16:04

Thank you for your answer. Yes, my client bought an existing contracts.
I think he bought an intangible asset.If not a know-how than it will be a goodwill.
Do I have that right this time?

How do I estimate useful life

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Replying to Bobbo:
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By Kate2843
08th Dec 2023 16:22

Yes,the existing contracts has been transferred to my client.

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Replying to Kate2843:
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By David Ex
08th Dec 2023 16:24

Kate2843 wrote:

Yes,the existing contracts has been transferred to my client.

Have the customers consented?

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Replying to David Ex:
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By Kate2843
08th Dec 2023 16:37

Yes , he has the customer consent.

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Replying to Kate2843:
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By Leywood
08th Dec 2023 16:47

Sorry but dont believe he will have this from the folk who are having their windows cleaned.

If you are struggling giving such tax advice, should you not be looking to buy in some advice from a practioner who does understand it all? For reasons of ethics and PII cover etc.

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Replying to Leywood:
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By Kate2843
08th Dec 2023 18:58

Thank you for your answer. I have to admit, I found it quite bizarre. Neither myself nor my client are known to you, but you jump to accusations very quickly.I find it totally inappropriate.

I assure you that if you have serious customers with more than one property and you clean their windows at least once a week, you must have customer consent. I am sure you can do math, as I mentioned how much my client can earn on a monthly basis.

I advise you not to assume and insult people. Stick to the facts and numbers like accountants should.

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Replying to Kate2843:
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By FactChecker
08th Dec 2023 20:01

Woah, you're following the wrong tangent (to mix a metaphor).

The topic of 'customer consent' cropped up in the context of whether the existing contracts have been transferred to your client - and, if so, with the consent of those customers?
That point is part of a series of pertinent questions raised by several responders (including my unanswered questions further down) that have a bearing on what the appropriate accounting treatment may be.

Whereas your 'customer consent' appears to relate solely to whether, on a job by job basis, your client will be allowed access to a new customer's premises.
Not the same thing - and not demonstrating any transfer of contract, which is what you were originally enquiring about.

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Replying to Kate2843:
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By Leywood
08th Dec 2023 21:03

Maths. Not math.

Accountants require facts. Your OP and responses are a fact vacuum. Basic questions remain unanswered.

Anyone purporting to be a professional is duty bound to stick to only doing work they are capable of.

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Replying to Kate2843:
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By FactChecker
08th Dec 2023 17:24

What, from each and every one of these customers?
And how enforceable are these 'contracts' (if, say, a customer changes mind next week)?
Also presumably no danger of any customer having paid in advance - leaving work still to be done without further payment?
And for how long must new window-cleaner maintain prices under the contracts?

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Replying to David Ex:
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By Bobbo
08th Dec 2023 16:37

HMRC wrote:

The taxpayer may claim that the list is plant because it has been written down or is on floppy disk.

Wonder when this bit was written!

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Replying to David Ex:
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By Kate2843
08th Dec 2023 23:08

Thank you I really appreciate your answer.It is very helpful

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By Tax Dragon
08th Dec 2023 22:04

What your client needs to do is increase the return to £5,000 and sell up for £20,000. Then the £16,000 paid is deducted in arriving at the capital gain. (You might not want to suggest his asset has a limited useful life.)

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