New queries, issue 4207

An amortisation argument

In its year ended 28 February 2005 my client company purchased goodwill and other assets in a general stores business from a partnership. There are no related parties between the director and the partners who sold the business to the company.

The fact that the goodwill had been acquired as part of a new business and was being amortised was explained in a covering letter sent to HMRC with the 2005 accounts.

HMRC have raised an enquiry into accounts for the year ended 28 February 2007 asking for details of the method of valuing goodwill and I have declined to continue correspondence on the grounds that the enquiry is out of time. HMRC says that to verify the validity of the amortisation such details are required.

In my view this should have been looked at within the time limits applying to the 2005 year....