Defining goodwill

The taxpayer company and Keyline were members of the same group.

In September 2003 Keyline sold its business to the taxpayer. In its accounts for the year ending 30 September 2003 the taxpayer company included an entry for goodwill and elected to write down the cost at an annual fixed rate under FA 2002 sch 29 paras 10 and 11.

HMRC disallowed the deduction on the ground that the goodwill had been created before the commencement date set out in FA 2002 sch 29: 1 April 2002.

The company appealed.

The First-tier Tribunal dismissed the appeal ruling that the definition of goodwill in para 4(2) of sch 29 included internally generated goodwill.

The goodwill in this instance was created by Keyline...