Franchise Fee Tax Deductible?

System
System Posts: 100,534 🤖 Admin 🤖
edited 12:08PM in AAT member discussion
Hi All

This is my first post so please be gentle with me!

I have just taken on a new client who has paid approx £10k as a franchise fee, and i'm not sure how to treat it in the accounts. Should I capitalise it and then put through an amount for depreciation? and if so what rate shoudl i use?

Any help would be appreciated

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Franchise Fee Tax Deductible?

    There are special treatments for franchises as intangible assets. Basically the amortisation is a tax allowable expense so you should capitalise the cost and amortise over the duration of the franchise.

    However there are special rules about franchise purchases that you need to check - there's a special manual on the HMRC website practitioners zone regarding intangibles. I'll post the link when I get home if that would help.

    Annette
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Franchise Fee Tax Deductible?

    Also check what exactly the franchise fee covers - often it covers stock, stationery etc - these can be written off immediately, so worthwhile getting a detailed list.

    Claudia

    Gentle enough? :wink:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Franchise Fee Tax Deductible?

    So gently Claudia, I bet she didn't even feel it!!

    Annette

    The manual pages I was talking about are here
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Franchise Fee Tax Deductible?

    Annette - is she a she or is she a he :roll: how can you tell?

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Franchise Fee Tax Deductible?

    Just a guess, I thought about that after! :oops:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Franchise Fee Tax Deductible?

    C'mon CMN what are you?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Franchise Fee Tax Deductible?

    Thanks for the answers guys, very helpful

    Your instincts must be very good Annette - yes I am a she

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