The goodwill zoo

ROGER JONES of Larking Gowen explores some misconceptions about the goodwill of a business in the light of recent comments from HM Revenue and Customs.

A BRIEF ARTICLE on goodwill and incorporation was included in HMRC's Tax Bulletin 76 April 2005. This focuses on problems with the transfer of goodwill to a newly formed company. It is probably indicative of changing fashion. Up to the late 1990s goodwill was often disregarded in the incorporation of a business. At that stage a transfer for value would have incurred significant costs in terms of stamp duty and capital gains tax. However times change and an enormous number of incorporations have taken place in the last few years. Stamp duty is now largely a redundant tax but goodwill had in any case been removed from liability in 2002. As regards capital gains tax business...