IFA

Question 1

What is a Pre FA 2002 IFA

Answer 1

IFA that was created or acquired prior to the 1st Apirl 2002. It is treated as a capital asset which is subject to CT on gains

Question 2

What happens if an unconnected company buys a Pre FA 2002 IFA

Answer 2

It will be treated under IFA rules

Question 3

What are the IFA rules

Answer 3

All debits and credits in the companies accounts are treated as income not capital.

Question 4

Give example of some IFA credits

Answer 4

Royalty receipts
Revaluation of IFA
Profit on realisation of IFA

Question 5

Give examples of some IFA debits

Answer 5

Royalty payments
Loss on IFA
Amortisation of IFA

Question 6

How else can a company amortise a IFA for tax purposes

Answer 6

Straight line deduction of 4% will only pick this if higher than that in accounts

Question 7

How do we calculate the income gain/ loss

Answer 7

Proceeds compared to TWDV

Question 8

Explain the time line for tax relief for amortisation of goodwill

Prior to 2002

Answer 8

Prior to 2002 - capital asset no amortisation

1st April 2002 - 7th July 2015 - trading deduction allowable or 4%

7th July 2015 - 31st March 2019 - no tax relief

After
Tax relief allowable provided the goodwill was acquired as part of the acquisition of a business where intellectual property was also acquired

Question 9

How do we calculate the taxable amortisation of goodwill after the 31st March 2019

Answer 9

6.5% SL deduction on the cost of goodwill

The Max is 6.5% of the cost of qualifying intellectual property