Purchased goodwill

JodieR

Sole Trader A has been trading for 20 years. He sells the business to Sole Trader B in Aug 2013 for £23000 (£3k P&M plus £20k goodwill). B trades as a sole trader until April 2014 when he incorporates the business, and sells on the goodwill to B Ltd for £20k. Will the goodwill be allowable for tax in the accounts for B Ltd?

Also, the other part to the question is whether it will make any difference that B is paying the money to A over 5 years?

Hope someone can help!
Thanks
Jodie

Hasan.Ahmet

If the goodwill is attached to the personal skills of the sole trader, it is possible that you may find it should not be included in incorporation.
This might help TCGA 1992 s165

Hope it helps