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My new client has the opportunity to acquire the distribution right for a food product in our local area. The 'deal' is that he would pay the food company £40,000 for which he would receive the exclusive right to rent dispensing machines which are designed to be placed in pubs, clubs, etc. My client would then purchase the snack food product from the food company and these would be sold from the dispensing machines.
My new client has the opportunity to acquire the distribution right for a food product in our local area. The 'deal' is that he would pay the food company £40 000 for which he would receive the exclusive right to rent dispensing machines which are designed to be placed in pubs clubs etc. My client would then purchase the snack food product from the food company and these would be sold from the dispensing machines.
My question is how I should treat the £40 000 payment for accounting and tax purposes. Should this payment be amortised over a period of years and can tax relief be obtained for it against profits? Will it make any difference if the client trades as a sole trader or via a limited company and what would be the position if he started as a sole trader and incorporated the business at...
