Goodwill found

BALLOON PROMOTIONS LTD Castro Kidney & Lucibello (SpC 524) confirms that franchisees may own saleable goodwill. This confirmation is long overdue. The decision meant the franchisees in the case succeeded with rollover relief claims. HMRC had argued that the franchisees could not own saleable goodwill.

The case examined in detail the meaning of goodwill and the extent to which HMRC may alter the apportionment of the consideration in a sale agreement. The case also acts as a general reminder that HMRC's published views of many years' standing may not be upheld in court. In the circumstances of this case the taxpayers and their advisers were right to structure the transaction based on their view of the law and facts and not HMRC's view.