Goodwill: companies acquiring other businesses, carried on prior to 1 April 2002 by a related party (Spotlight 1)
Published 5 August 2010
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HM Revenue and Customs (HMRC) are aware of arrangements to claim Corporation Tax relief for goodwill under the corporate intangible fixed asset regime.
This is where a company has acquired a business that was carried on by a related party before commencement of the regime (1 April 2002). The rules of the regime exclude goodwill in these circumstances, so no relief is available.
HMRC are challenging any such claims with a view to litigation. When challenged, companies have typically accepted HMRC adjustments which meant that a case has yet to be heard in court.
Therefore, legislation was announced at Budget 2009 to confirm the rules. The legislation will apply from 22 April 2009. It will be deemed to have always have had effect for the purposes of applying the legislation after that date. HMRC will continue to challenge past claims.