Purchased goodwill meaning

In this issue: Companies and corporation tax Individuals and income tax Stamp and transfer taxes Taxes management and litigation International Employment taxes LexTalk®Tax: a Lexis®Nexis community Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax UT upholds FTT decision on valuation and allocation of consideration in acquisition of care homes (Nellsar v HMRC) In Nellsar Ltd [2025] UKUT 164 (TCC), the Upper Tribunal rejected both appeals, affirming the FTT’s finding that Nellsar’s accounts did not comply with GAAP for corporation tax relief on goodwill amortisation. Nellsar purchased five care homes as going concerns and assigned substantial elements of the price to goodwill, valuing the properties using depreciated replacement cost (DRC). The FTT decided that, under UK GAAP, the correct basis was market value, adjusted for special assumptions, because operating care homes were sufficiently ‘similar in type and condition’ to the...

Nellsar Ltd v HMRC [2025] UKUT 164 (TCC) Nellsar had purchased five care homes as going concerns. On each transaction, its financial statements apportioned the consideration between goodwill and the freehold estate by reference to DRC, with a modest allocation to fixtures and fittings, which was uncontroversial. As amounts booked as goodwill in GAAP-compliant accounts attract amortisation relief for corporation tax, Nellsar benefited from attributing a larger slice to goodwill, and the disagreement therefore turned on the proper accounting treatment, for corporation tax purposes, of goodwill arising on these acquisitions. Upholding the FTT’s approach, which placed a greater proportion of the price on the properties and consequently reduced the goodwill, the UT stated that there was ample evidence supporting the FTT’s conclusions—namely, that GAAP, and in particular FRS 7.9(a), mandated use of the market value of the care home properties rather than their DRC. The UT further held that there was sufficient material to support the FTT’s finding that operational care homes were ‘assets similar in type and condition’...

In this edition: Budgets and Finance Bills Corporation tax and companies International Topical issues Employment taxation Real estate tax Daily and weekly news briefings Updated and new content Dates for your diary Trackers Helpful information Budgets and Finance Bills Budget 2025 On Wednesday 26 November 2025, the Chancellor of the Exchequer, Rachel Reeves, presented the Budget...

A AIM A market for securities run by London Stock Exchange plc, featuring lighter admission criteria and ongoing obligations than the main regulated markets. Formerly the Alternative Investment Market, it is now referred to simply as AIM. AIM company A company with a class of its shares traded on AIM. Acquisition accounting An accounting method whereby the acquirer recognises the acquired assets and liabilities on its balance sheet at the acquisition date, with any difference between the consideration paid and the fair value of the net assets acquired recorded as purchased goodwill. Allotment Shares are treated as allotted when a person obtains the unconditional right to be entered in the company’s register of members in respect of those shares (Companies Act 2006, s 558). Allotment is then followed by the issue of the shares. Allotment authority The authority under CA 2006, ss 549–551 enabling the directors to allot shares in the company, or to grant rights to subscribe for, or...