Amortisation of goodwill after merger of practices

In 2010 two dentists merged their practices to form the taxpayer. They had equal shareholdings and each was a director. They had previously practised as self-employed dentists from the same site sharing overhead costs since 1996.

The taxpayer claimed deductions for the amortisation of goodwill to be written off in equal instalments over five years. HMRC disallowed the claim on the basis that the goodwill had been acquired from a related party that had carried on the same business before 1 April 2002. Under CTA 2009 s 882(1) goodwill that had not been created by the company on or after 1 April 2002 was excluded from the intangible asset rules.

The company appealed. It said the ‘business in question’ (s 884) was that of the company. It was not the same one that the shareholders had carried on as individuals so it could not have been carried on...