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Uncertain incorporation

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26 September 2007

Issue: 4127 / Categories: Forum & Feedback

I was a sole practitioner until 31 October 2002 when my business became incorporated. At that point, the goodwill was sold to the company for £225,000, which I think may be a little high.

My question is whether I can write off the goodwill against tax assuming that it is free goodwill. As I have not done this to date is it possible to start now? Alternatively in view of the goodwill valuation should I leave things alone and not claim?

As a final question is it possible to revalue the goodwill now?

I look forward to readers' views.

Query T17 083 — Goody

Reply from Thicket:

To find the answer to this question we need to look at the commencement and transitional provisions within the corporate intangibles rules. These are found in paras 117 onwards in FA 2002 Sch 29. The goodwill in the company will be an intangible asset and will have been acquired from a related party since a participator is within this definition (para 95(1) Case Three (a)).

Paragraph 118(1)(c) tells us...

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Uncertain incorporation

© Copyright LexisNexis 2024. All rights reserved.

26 September 2007

I was a sole practitioner until 31 October 2002 when my business became incorporated. At that point, the goodwill was sold to the company for £225,000, which I think may be a little high.

My question is whether I can write off the goodwill against tax assuming that it is free goodwill. As I have not done this to date is it possible to start now? Alternatively in view of the goodwill valuation should I leave things alone and not claim?

As a final question is it possible to revalue the goodwill now?

I look forward to readers' views.

Query T17 083 — Goody

Reply from Thicket:

To find the answer to this question we need to look at the commencement and transitional provisions within the corporate intangibles rules. These are found in paras 117 onwards in FA 2002 Sch 29. The goodwill in the company will be an intangible asset and will have been acquired from a related party since a participator is within this definition (para 95(1) Case Three (a)).

Paragraph 118(1)(c) tells us...

If you or your firm subscribes to Taxation.co.uk, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Subscribe Now...

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.

Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.

Issue:

4127

Categories: Forum & Feedback [1]

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