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Blenheims Estate and Asset Management Ltd (TC2696)
M formed the taxpayer company an estate management business in 2006. He owned another firm of the same kind which began trading before 2002 and which he sold in May 2006 to the taxpayer for £565 000 receiving shares as consideration.
The value of the goodwill was stated in the taxpayer’s accounts as £565 000.
On the day of the sale an unrelated company bought 480 250 of M’s shares for £480 250 and entered into an option to buy the remaining 84 750 shares for £84 750. The option was exercised in February 2007.
The aim of the arrangements was to ensure M retained a 15% holding in the taxpayer to enable it to trade under the business name he used.
The taxpayer firm claimed an amortisation in respect of goodwill in its 2008 accounts including £565 000 as the cost of...
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