Home For accounting professionals General accounting discussion
Current updates regarding coronavirus (Covid-19) and the precautions AAT are taking will be continually updated on the below page.

Please check this link for the latest updates:
We hope you are all safe and well and if you need us we will be here. 💚


Franchise sole trader- isn't this just another purchase

De6De6 New MemberRegistered Posts: 9
My client has bought a franchise and is trading as a sole trader.

Now whilst I know that this is not an intangible asset and is not recognised for capital allowances(AIA).

My dilemma is this, the company that sold the franchise will have to account for this as a normal trading receipt. Therefore can I reflect this (on the basis of fiscal neutrality) as a normal business purchase for my client and not disallow the depreciations element that I have calculated against the franchise costs

Many thanks

Deb::confused1:

Comments

  • groundygroundy Trusted Regular Registered Posts: 495
    I would have thought the licence/franchise fee paid is an intangible asset and there will be no tax relief available unless the franchise is sold
  • burgburg Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,441
    Check what the francshise fee is for as it sometimes can include various assets (such as tools/an), advertising, training, etc.
    Split it out and then you can claim the allowable items.
    Regards,

    Burg
  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    groundy wrote: »
    I would have thought the licence/franchise fee paid is an intangible asset and there will be no tax relief available unless the franchise is sold

    Agreed; the fee should be allowable on a capital gains tax computation when the franchise is sold.
Sign In or Register to comment.