Goodwill

T J
T J Registered Posts: 26 ? ? ?
I've been researching the CT treatment on goodwill, which suggests that if a company acquired goodwill after 1.4.2002 the amortisation for each year is allowable for tax.

I have taken on a client who incorporated after 1.4.2002 with goodwill of £80000 which is being amortised over 10 years. The previous accountants have added back the amortisation in calculating CT, but I'm wondering if this is correct.

Any ideas?

Comments

  • deanshepherd
    deanshepherd Registered Posts: 1,809
    It is not the incorporation date that is important but the date the business commenced, which was presumably before 1st April 2002 and hence disallowed.
  • T J
    T J Registered Posts: 26 ? ? ?
    Thank you
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    If the sole trade commenced after 2002, and then incorporated, is the amortisation on the free goodwill on incporation allowable?

    My understanding was that it is, but have read conflicting things. Can't seem to find chapter and verse now!
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    Yes it is.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Sweet. Thanks. :)

    If that goodwill subsequently got written off/ impaired, is that allowable too?! That's probably too much to hope for!!
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    Yes, all allowable.

    Of course if it was from a connected party then suspicions will be raised on the original valuation if it was later deemed to be impaired.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Yes, all allowable.

    You've just made my day!!! :001_wub:

    Thank you!!
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