A client of ours some seven years ago (prior to our acting) merged two unconnected businesses (both unincorporated partnerships) into a new limited company. The partnerships ceased and the Limited company commenced the next day. Not all the partners from the prior businesses continued in the Limited company. Their goodwill was valued and purchased by the company and amortised and claimed for tax purposes on the basis that it was acquired from unconnected parties (in that they did not become directors or participators of the newco).
HMRC accepted for first two years and did not enquire and then opened up an enquiry into year three. A long enquiry has been carried out (three years to date) with HMRC not sure of its ground and seeking second opinions. No protective assessments were raised in subsequent years and no enquiries raised. We have accepted that technically...
