Ask an expert: Transfer of goodwill impairment

Question: The question concerns the acquisition by a company of another company with a negative balance sheet (no fixed assets). Following the acquisition the trade and assets (net liabilities) of the target are hived-up to the acquirer for no consideration. The deficit on assets is accounted for by the transferee as goodwill which it then writes-off. The trade of the target company commenced after 31 March 2002. It does not seem right but why should the transferee not claim tax relief under the intangibles regime for the write-off on an impairment review?

Answer: ‘Goodwill’ is included in the intangible fixed assets regime by virtue of CTA 2009 s 715. This states that it has the same meaning as it does for accounting purposes. So if the accountants recognise goodwill on the transfer of the...