Deductions for amortisation of goodwill

In 1999 Mr Beadnall and Mr Copley signed a partnership agreement to run an estate agency which had been in existence since 1991. Mr Copley retired in 2010 ending the partnership. Mr Beadnall continued the business as a sole trader incorporating the trade in 2013.

In 2011 they signed a deed of retirement which confirmed the termination of the partnership and transferred the partnership property described as 50% of the market value of the business to Mr Beadnall in return for a payment of £450 000. Partnership property included ‘goodwill and all the assets’ although the assets were bought separately.

The business recognised £900 000 of goodwill in the first set of accounts 50% of which was treated as pre-2002 goodwill not eligible for amortisation. The business claimed the remaining 50% as a corporation tax deduction calling it an acquisition of...