The First-tier Tribunal agreed with the taxpayer’s analysis in a case where there was a dispute over the date on which the business and its associated goodwill were transferred to a connected company (2 Green Smile Ltd v HMRC [2023] UKFTT 15 (TC)). The question also arose of whether the company was able to amortise goodwill in the accounts submitted.
The FTT held that there was “ample evidence that the Board Minute reflected an oral agreement to transfer all of the assets comprising the business of the partnership, including the goodwill, from the partnership to the company, and that oral agreement had been reached on or before 30 November 2014”.
Siding with the taxpayer, the FTT summarised the position as follows:
“It is our conclusion that the oral agreement to transfer the business which was entered into by the partners and the company on or around 30 November 2014, and which was evidenced by the Board Minute was not legally effective to transfer the goodwill from the partnership to the company by dint of the application of the 1989 Act. However, on 1 December 2014 there was a de facto transfer of the business (including the goodwill) from the partnership to the company, and thus all income generated from the dental business after that date belonged, beneficially, to the company.
The company has, therefore, been liable to pay tax on that income and has been entitled to amortise the goodwill as it has claimed in its tax returns. There is no income to be added back to the partnership as alleged by HMRC and which they have reflected in the amended partnership return and the consequential assessments on the partners.”
https://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08677.html
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Taxation of Partnerships, by Paul Howard, addresses all the key taxes that arise for partnerships – income tax, CGT, SDLT, corporation tax. The book includes full reference to statutory provisions and also to HMRC practice and interpretations.
