# Tax question



## Serious (Mar 19, 2008)

Can the purchase of a business be added to the tax form somewhere?

The legal costs, value of a van, stock and equipment has already been deducted and entered, leaving £XX,XXX. Call it good will if you like.

Thanks for your help. Been waiting for the tax office to call back for almost a week now.:wall:



Florist BTW. and the shop is rented. Ta.


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## DCB (Jan 18, 2009)

Id say yes....but i wouldnt know where about on the form, my accountant does all that, Have you deducted your Vehicle mileage from your tax too?? *dont Quote me, but you can claim 40p for every business mile against your tax bill.. That knocks a big chunk of my tax bill every year


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## PaulN (Jan 17, 2008)

Serious said:


> Can the purchase of a business be added to the tax form somewhere?
> 
> The legal costs, value of a van, stock and equipment has already been deducted and entered, leaving £XX,XXX. Call it good will if you like.
> 
> ...


Have you actually bought it as a going concern or starting it up from scratch? If its a going concern then im sure theres somewhere for you to include it as Expenditure but our account does all that and we sent all the sign paperwork back to him yesterday.

Cheers

PaulN


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## joe_0_1 (Apr 7, 2007)

DCB said:


> Id say yes....but i wouldnt know where about on the form, my accountant does all that, Have you deducted your Vehicle mileage from your tax too?? **dont Quote me, but you can claim 40p for every business mile against your tax bill.. That knocks a big chunk of my tax bill every year *


Up to 10,000 miles 

The rest maximum is at 25p


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## Serious (Mar 19, 2008)

Yep is was a going concern.

Not my Florist BTW.


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## joe_0_1 (Apr 7, 2007)

The goodwill should be recognised on the balance sheet then? So surely it will be recognised from there.


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## PaulN (Jan 17, 2008)

Serious said:


> Yep is was a going concern.
> 
> Not my Florist BTW.


So why you asking the questions then?  You have got an account haven't you?


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## organgrinder (Jan 20, 2008)

The goodwill is an intangible asset to be shown on the Balance Sheet. For this kind of stuff you really need an accountant to get it right.

Nothing in the new Tax Returns is intuitive and the tax laws are now so complex on what you get relief for and how you get it that it isn't worth the risk of getting it wrong.

Long gone are the days you could take questions to the local tax office and get them to help you fill in your form. It's up to you to know all the laws and get them right 100% of the time, otherwise you get a good going over and charged interest and penalties. Nothing nanny about this part of the State!


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## 1animal1 (Aug 20, 2008)

best thing is to chuck £100 at an accountant and let them get on with it, obviously dpending on the scale of your business accounts..... they will know what you can and cant get away with...and as we all know it can be contested for upto 6 years (i seem to remember) so your basically just hedging your bets on someone with more real time knowledge


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## organgrinder (Jan 20, 2008)

Take a bit more than £100!

And remember that all accountants, both qualified and unqualified together with book-keepers and tax advisers have to be registered for money laundering and are required to report any cases of known or suspected money laundering. Money laundering in these circumstances means anyone who in some way underpays their tax deliberately, or if by accident retains the proceeds after the error is pointed out.


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## DCB (Jan 18, 2009)

It makes me laugh, my accountant has only given me 2 invoices in the past 5 years!!! there is only so many times i can nag them for one..!!


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## 1animal1 (Aug 20, 2008)

na you can get simple books done for £70 if you know who to go to, again depends on the scale, simple fuel receipts without many overheads would get you somewhere round this figure...... case above would be more though so i agree there


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## Nickos (Apr 27, 2006)

anything that can be classed as business expense is tax deductable pretty much.


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## organgrinder (Jan 20, 2008)

1animal1 said:


> na you can get simple books done for £70 if you know who to go to, again depends on the scale, simple fuel receipts without many overheads would get you somewhere round this figure...... case above would be more though so i agree there


£70 wouldn't cover the cost of the licence fee and computer maintenance etc to run a set of accounts and tax return on my software let alone my PI insurance, professional subs, overheads and more importantly my time. You get what you pay for though in most walks of life.


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## Serious (Mar 19, 2008)

Thanks for your replys

Tax office have just phoned at last.

For anybody who is interested, The good will £££ will only come into account when you stop trading/sell the business at a profit or loss.


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## 1animal1 (Aug 20, 2008)

organgrinder said:


> £70 wouldn't cover the cost of the licence fee and computer maintenance etc to run a set of accounts and tax return on my software let alone my PI insurance, professional subs, overheads and more importantly my time. You get what you pay for though in most walks of life.


it wouldnt but if you find the right people, i know as ive done it and had no come backs at all from the revenue based on their calculations.... we arent talking about running a set of accounts, we're talking about a simple 
tax return unless im missing what the orignal post was asking for? the cost of PI subs and overheads do not come into the cost of an accountant, yes you can claim against them etcetc but thats not what this post is about......i couldnt agree more with the statement you get what you pay for.... but you dont go and hire a chartered accountant to do a simple tax return, its the old using a sledgehammer technique... pointless.... your over complicating this


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## 1animal1 (Aug 20, 2008)

Serious said:


> Thanks for your replys
> 
> Tax office have just phoned at last.
> 
> For anybody who is interested, The good will £££ will only come into account when you stop trading/sell the business at a profit or loss.


sorry mate, think everyone missed the point here.... yup see what your saying as you only have a value on the business once you sell it or stop trading to offset growth/decline


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## Nickos (Apr 27, 2006)

I pay £120 for my tax return to be prepared. They probably save me that tbh overall.


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## PaulN (Jan 17, 2008)

Serious said:


> Thanks for your replys
> 
> Tax office have just phoned at last.
> 
> For anybody who is interested, The good will £££ will only come into account when you stop trading/sell the business at a profit or loss.


I really cant see that myself,

If you have spent company money buying somthing and its shown on your bank account it should be in your year end accounts??

That money used should help reduce your tax payment i can understand when you sell you will need to pay tax on it then but am i missing something.

If you have bought a business for name and clients only its no different to buying a business van or building.

Cheers

PaulN


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## JoeAVS1 (Jul 8, 2008)

Nickos said:


> I pay £120 for my tax return to be prepared. They probably save me that tbh overall.


If you are gathering all your own info throughout the tax year (turnover/expense figures) it really is not difficult to do your own tax return online, I've done it for the last two years and in your case you make £120.......? my 2p


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## 1animal1 (Aug 20, 2008)

PaulN said:


> I really cant see that myself,
> 
> If you have spent company money buying somthing and its shown on your bank account it should be in your year end accounts??
> 
> ...


You cant value a business until you sell it or stop trading regardless of what you have paid.... so 1st problem is what are you going to offset against as you have no value in theory? purchase of vans etc can be offset against profit so is really a different issue...


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## PaulN (Jan 17, 2008)

1animal1 said:


> You cant value a business until you sell it or stop trading regardless of what you have paid.... so 1st problem is what are you going to offset against as you have no value in theory? purchase of vans etc can be offset against profit so is really a different issue...


I would have thought that was true for a business being started up from scratch, as you had no value to start with, but when buying a business you know the value because you have paid for it....

Anyway i'll leave it there because im done and dusted regarding tax this year.

Cheers

PaulN


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## organgrinder (Jan 20, 2008)

The problem here is that it is goodwill which is treated as an asset in the accounts and is shown in the Balance Sheet, rather than being an expense such as a van repair which would be deducted from profits in the Profit and Loss account.

Other assets such as a building or a piece of machinery also go in the Balance Sheet and are not shown as a deduction from profit.

Some assets used in the trade such as equipment or vans are given tax deductions from profit called Capital Allowances. This is effectively a tax allowance for depreciation. Other assets such as goodwill and property get no tax allowances against profit. However if you sell the assets they will be subject to Capital Gains Tax which is calculated by deducting the original cost from the sales value. It is only at this stage that you get any relief for the cost of the asset.


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## Dipesh (Oct 12, 2007)

organgrinder said:


> The problem here is that it is goodwill which is treated as an asset in the accounts and is shown in the Balance Sheet, rather than being an expense such as a van repair which would be deducted from profits in the Profit and Loss account.
> 
> Other assets such as a building or a piece of machinery also go in the Balance Sheet and are not shown as a deduction from profit.
> 
> Some assets used in the trade such as equipment or vans are given tax deductions from profit called Capital Allowances. This is effectively a tax allowance for depreciation. Other assets such as goodwill and property get no tax allowances against profit. However if you sell the assets they will be subject to Capital Gains Tax which is calculated by deducting the original cost from the sales value. It is only at this stage that you get any relief for the cost of the asset.


Organ grinder's right, theres so much more he could say when calculating this, the rules etc but i think he's put it quite well!

Are you ACCA or ACA?

I'm still a PQ ACCA, not long left to go though!


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## organgrinder (Jan 20, 2008)

Hi Dipesh I am FCCA and am a partner in a firm of Chartered Accountants.

It does make me laugh a bit when people want one word answers to what are fairly complicated situations with underlying principles which are fairly alien to those who are not accountants or involved in tax.


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## Serious (Mar 19, 2008)

Who asked for a one word answer?


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## organgrinder (Jan 20, 2008)

Serious said:


> Who asked for a one word answer?


It wasn't meant as a jibe at you Serious. At this time of year I get countless questions from people who understandably want to do their returns on the cheap, but most of those questions are near impossible to answer without asking another dozen questions.

Ten years ago tax was relatively straightforward. Now it is a minefield littered with traps for the unwary and with all the responsibilty of getting it right being with the taxpayer. It is dangerous territory to dabble in once a year when you have more complicated affairs, being self employed.

We have software which costs us over £10k a year for updates and support (forgetting the initial costs) and we have staff with 20 and 30 years experience. Even then we have to refer to legislation, textbooks and manuals to ensure we get the right answer.


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