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What happens to goodwill on cessation of a ltd co?

I have a sole director Ltd Co client in the construction industry with 5-10 staff historically. I understand £60,000 goodwill was created on incorporation of the director's old partnership with his father in 2007. It has not been amortised and remains on the balance sheet at cost. The company is now ceasing and staff are being made redundant. The sole director is then commencing self employment as a contractor on a vastly reduced scale, with no staff and undertaking much smaller jobs. He is not taking over the business as a going concern and is only retaining minimal assets (tools etc) but will be using virtually the same trading name. The goodwill was related to larger scale construction work undertaken by the company and partnership before it as a longstanding business run by two generations of the same family.

Is it reasonable to say that the goodwill is now of negligible value? If so, the company accounts will show a loss. Can this be utilised in the same way as a trading loss or is it treated differently?

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18th Jan 2019 16:54

Certainly sounds like it's worth nothing.

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21st Jan 2019 12:24

When did the previously unincorporated business start? Why was it not amortised?

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to andrew1211
21st Jan 2019 13:08

Business started 1970s/80s and goodwill wasn't being amortised when I took over.

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21st Jan 2019 13:27

I doubt it is tax deductible then

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to andrew1211
21st Jan 2019 13:37

Can I ask for what reason? I think Goodwill should have been amortised and tax deductible but wasn't for some reason. I'm getting a bit confused by the change in rules. Thanks.

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21st Jan 2019 13:44

It is 'old' goodwill effectively created before 1 April 2002 so is not tax deductible.

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to andrew1211
21st Jan 2019 14:08

So in summary, the accounts will show a loss on cessation but I can't do anything with it?

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to Accounting4Life
21st Jan 2019 16:25

Well the bit of the loss relating to goodwill will be disallowed for tax but you might have other losses that still remain that can be used in some way.

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