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Hive up

31 August 2006
Issue: 4073 / Categories: Forum & Feedback

Our client, Acquire Ltd, is purchasing the shares in another limited company.  Our plan is to hive up the assets and trade shortly afterwards into Acquire Ltd, leaving the old company as an empty shell.

Our client Acquire Ltd is purchasing the shares in another limited company.  Our plan is to hive up the assets and trade shortly afterwards into Acquire Ltd leaving the old company as an empty shell.
Our client is paying a substantial sum which basically represents goodwill. If they were to kill off the old company the anti-avoidance provisions would stop them realising a capital loss due to the depreciatory transaction of hiving up the trade. But if the anti-avoidance rules say this then surely they must by the same concept give value to the goodwill in Acquire Ltd upon the ultimate disposal of that trade? I am not suggesting that we give it value immediately and try to claim amortisation; but would it not be unfair of HMRC to then charge Acquire Ltd on a gain with zero base cost...

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