David Franks
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Tax treatment of franchise fees

Tax treatment of franchise fees

If someone purchased a franchise for £100k that is for an indefinite period and does not cover stock or training, merely use of a household name, can it be amortised over 5 years in the p and l and thus written off against tax. I have read two totally opposing cases on this. Many thanks.


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01st Mar 2011 13:16

Who is it?

If a company bought it it is an intangible asset and can be amortised under FRS10 and relief claimed in the P&L. You would have to justify the accounting policy of writing off over 5 years.

If an individual bought it it is still an intangible asset but no relief is available under the ITTOIA for the writing off of an intangible asset, unless you could argue that it is rent paid in advance for the use of the name - which will depend on the nature and wording of the agreement, but on the face of it seems unlikely from what you say.

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