How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Sam Pathak Your Own Question

Sam Pathak
Sam Pathak, Mr S Pathak MBA FCCA CTA
Category: UK Tax
Satisfied Customers: 464
Experience:  Tax Consultant & Freelance Lecturer over 9 years experience
38891562
Type Your UK Tax Question Here...
Sam Pathak is online now
A new question is answered every 9 seconds

When is goodwill tax deductible? I have never dealt with it

Resolved Question:

When is goodwill tax deductible? I have never dealt with it before and the rules seem incredibly complex and vague. I have a client that was advised to take £170k goodwill out of his company which he did in 2006 and has been amortising at 10% straight line per annum. I cannot tell from the last three years accounts whether or not this was deducted from the taxable profits or not. Any help most gratefully received! Thanks
Submitted: 11 months ago.
Category: UK Tax
Expert:  Sam Pathak replied 11 months ago.

 

Hello,

 

Thank you for your question.

 

In order for me to respond to you more precisely, I would require few more information from you please:

 

(1) What does the company do?

 

(2) Is he/she director/shareholder (what % shareholding, if any) of the company?

 

(3) Was his/her business (sole trader or partnership) incorporated in 2006 and thus goodwill created? When the business, in the first place, was established/started?

 

(4) Was this £170k valuation just a 'good guess' or with some basis reflecting reasonable market value? Was any formal/structured valuation done at the time?

 

Thank you and look forward to hearing from you.

 

Kind regards

Sam Pathak

Customer: replied 11 months ago.
Hi Sam, thanks for your response. In order of your questions...

The business is photography
Sole director and shareholder
I believe your first statement is correct. The business was run as a sole trader prior to this.
I'm not sure but I would assume 'best guess' - it passed an HMRC audit a couple years ago I understand.

Many thanks
Expert:  Sam Pathak replied 11 months ago.

 

Hello,

 

Thank you for the additional information.

 

Apology for the delay in getting back to you; as I was away for a client meeting.

 

Unfortunately, the answer is no.

 

No tax relief is available for goodwill amortisation, in this case, because of 'connected party' situation and the value of the goodwill was not based on the independent open market value.

 

Also, this case appears to be more of a 'personal goodwill' (as this is 'his' sort of personal photography business!) rather than 'business goodwill' as such. This will further deny the relief.

 

I trust the above clarifies.

 

Kind regards

Sam Pathak

Sam Pathak, Mr S Pathak MBA FCCA CTA
Category: UK Tax
Satisfied Customers: 464
Experience: Tax Consultant & Freelance Lecturer over 9 years experience
Sam Pathak and 4 other UK Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Andrew Baker(baktax)

    Personal Tax Adviser

    Satisfied Customers:

    756
    35+ years experience in income tax, CGT, non-residence
< Last | Next >
  • http://ww2.justanswer.com/uploads/baktax/2009-7-15_202414_Frame.jpg Andrew Baker(baktax)'s Avatar

    Andrew Baker(baktax)

    Personal Tax Adviser

    Satisfied Customers:

    756
    35+ years experience in income tax, CGT, non-residence
  • http://ww2.justanswer.com/uploads/teap007/2009-01-10_145815_bill_justanswer_for_profile.jpg TEAP007's Avatar

    TEAP007

    Tax Preparer

    Satisfied Customers:

    754
    Fully Trained Inspector of Taxes / District Inspector/ Team Leader/ Offshore Consultant/ 41 years
  • http://ww2.justanswer.com/uploads/BE/berduchwal/2011-6-7_84817_pict0854.64x64.jpg berduchwal's Avatar

    berduchwal

    Accountant

    Satisfied Customers:

    669
    Qualified accountant and bookkeeper running my own practice since 2008.
  • http://ww2.justanswer.com/uploads/JO/Josh2010/2012-4-29_19490_GettyImages80121770B.64x64.jpg Joshua's Avatar

    Joshua

    Lawyer

    Satisfied Customers:

    61
    LL.B (Hons), Higher Prof. Dip. Law & Practice
  • http://ww2.justanswer.com/uploads/RO/Ronaann/2012-3-19_23343_SSL22629.64x64.JPG Mrs-Tax's Avatar

    Mrs-Tax

    Tax Adviser

    Satisfied Customers:

    59
    Law Degree, 19 years in UK Tax.
  • http://ww2.justanswer.com/uploads/TG/TGraham12/2012-7-17_81212_bigstockBusinessHandshake508163.64x64.jpg Thomas's Avatar

    Thomas

    Solicitor

    Satisfied Customers:

    48
    Exposure to general tax issues
  • http://ww2.justanswer.com/uploads/struppiaml/2009-10-9_95150_anthony_business_002.jpg AnthonyL's Avatar

    AnthonyL

    Tax Adviser

    Satisfied Customers:

    19
    ATT, ATII, 12 years tax experience