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TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 17610
Experience:  International tax
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Hi i recently bought over a company can i claim against tax

Customer Question

Hi i recently bought over a company can i claim against tax the cost of the company
Submitted: 3 years ago.
Category: Tax
Expert:  TaxRobin replied 3 years ago.
A business entity is a collection of assets and liabilities, often with an ongoing trade. The business is bought as an overall deal. Sometimes, but not always, the sale agreement apportions the sale proceeds between different parts of the business being sold.
The cost of trading stock, the hire of equipment and premises are clearly tax deductible. The purchase is on capital account for accounting and most tax purposes.
A capital payment to acquire a business is not deductible.
Expenditure on the acquisition of a business, with the exception of whatever relates to trading stock, is incurred on capital account. The factors taken into account in computing the consideration given for a business do not change what is capital expenditure into revenue expenditure. Business acquisition includes entering into franchise agreements.