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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4194
Experience:  FCCA FCMA CGMA ACIS
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Hi, I recently bought a hypnotherapy business for £20k, paid

Customer Question

Hi, I recently bought a hypnotherapy business for £20k, paid for in 2 instalments, one falling in 2013/14 and one in 2014/15. The business value was made up of Goodwill, Licence to Practice and transfer of the business websites. Would HMRC regard this as acquisition of assets, or would some/all of this be allowable as running costs? Chris
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello Chris, I'm Keith and happy to help you with your question.
Firstly the installment method is irrelevant and you will be deemed to have bought the whole shooting match in the 13/14 tax year. Here is the HMRC advice on what are capital items (in the long term subject to Capital Gains Tax (CGT) on disposal):
'You may have to pay Capital Gains Tax if you make a profit or gain when you dispose of all or part a business asset. Disposing of an asset might be selling it, giving it away or exchanging it.
A business asset could be:
Shares
Land
Buildings
A business franchise
Fixtures and fittings
The goodwill of the business - its good name or reputation
If you own your own business, or you're a partner in a business, you usually report capital gains and losses on your Self Assessment tax return.
It's different if your business is carried on by a limited company, in which you may be a director or shareholder. Any profits on assets disposed of form part of the total profits of the company on which it pays Corporation Tax.'
So you see it is a case of six of one and half a dozen of the other, well not quite, but I am sure that you get the point. The business websites, the Licence to Practice and similar items for example are probably the subject on a periodic fee so it would be appropriate for them to be passed through the Profit and Loss Account as a running cost.
I do hope I have assisted you with your question.
bigduckontax and 2 other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support.