Franchise sole trader- isn't this just another purchase

De6
De6 Registered Posts: 9 New contributor 🐸
edited June 18 in AAT member discussion
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

  • groundy
    groundy Registered Posts: 495 Dedicated contributor 🦉
    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
  • burg
    burg Registered, Moderator Posts: 1,425 mod
    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
  • reader
    reader Registered Posts: 1,029 Beyond epic contributor 🧙‍♂️
    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.

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