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TaxVince
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 961
Experience:  Chartered Accountant >20 years + Qualified IFA
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Company A acquires company B (not related and in business prior

Customer Question

Company A acquires company B (not related and in business prior to 2002). Company A then hives up all trade and assets of Company B to Company A. The excess paid over fair value amounts is treated as goodwill.
Goodwill is amortised over 20 years.
Q: Can you write off goodwill amortised as a charge against corporation tax profits?
Submitted: 10 months ago.
Category: UK Tax
Expert:  TaxVince replied 10 months ago.

TaxVince :

Hi. Thanks for your question. Should you find the answer below incomplete or you are not fully answered, please drop a reply before rating.

TaxVince :

This is goodwill acquired on buying an unconnected business then the amortisation of that goodwill is a deductible expense and you can charge against the corporation tax profits.

TaxVince :

Please clarify if the goodwill arose before or after 2002?

TaxVince :

You can probably ignore my last question if the trasaction was indeed between UN related parties. However what im not clear with your question is that you seem to say Company A then hives up all the trade of Company B? Im not clear what this means. Was this just a fair valuation of assets.

The principle to note here is if the goodwill was acquired from an unrelated party on or after 1 April 2002 then relief for the purchased goodwill is ALWAYS available in the company. The amount paid by the company for the goodwill should be amortised over the 20 years or the expected useful life and the amortisation will be deductible for corporation tax. However if the goodwill was acquired from a related party and that related party was in existence before 1 April 2002 then no relief is available.

TaxVince :

I see you are now offline and hence i will wait to hear from you if you have any further questions.

TaxVince :

If sorted you could rate the question. If not please drop a message,

TaxVince :

Regards

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