Franchise sole trader- isn't this just another purchase

De6De6 New MemberPosts: 9Registered
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 Posts: 495Registered
    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 GloucesterPosts: 1,440Moderator, FMAAT, AAT Licensed Accountant
    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 Posts: 1,039MAAT, AAT Licensed Accountant
    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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