Associated problem

My clients run a professional partnership and have a limited company owned by the partnership which has carried on a part of their business for many years. The limited company acquired the practice of another completely independent sole trader professional (Mr A) in 2004 and upon acquisition he became a partner in the professional partnership.
HMRC have contended that the limited company cannot benefit from corporation tax relief on the amortisation of the goodwill acquired from Mr A because he is associated with the company since he became a partner in the main partnership. It is clear that the partners are associated with the company since they collectively control it and are associated with each other but neither the company nor the original partners were associated with Mr A before the acquisition.
I believe that FA 2002 Sch 29 para 118(1)(b) applies in that 'at the time of acquisition'...