New queries, issue 4342

LLPs and intangibles

Alan and Bert were the only members of a limited liability partnership (LLP) which purchased goodwill in 2005 for £100 000. The LLP had fully amortised it by the end of 2010 at £25 000 pa but received no tax deduction.

On 1 January 2011 they sold their members’ interest in the LLP to NewCo Ltd for £200 000 worth of shares representing the current value of the goodwill. Subject to reliefs exemptions etc Alan and Bert will pay capital gains tax on their £100 000 gain.

NewCo has acquired a member’s interest in an LLP which must be disclosed on its balance sheet as an investment and is not systematically amortised. No amortisation appears in the 2011 LLP accounts as the purchased goodwill was fully amortised by the LLP before NewCo became a member.

Thus there is...