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SDLT: Apportionment

A day nursery was acquired by a client for 900,000, of which 350,000 was goodwill and not taxable to SDLT. HMRC argued that there could be no separable goodwill as this type of property was normally valued on its potential trading profits. The property was a converted house and HMRC had developed their own valuation approach, which is not based on either the law or decided cases. After considerable technical argument and a range of valuations being put forward by HMRC the matter was agreed at the figures returned. This saved the client 14,000 in SDLT, more importantly it provided a potential tax relief in that the goodwill could then be written down against tax over the subsequent years. The HMRC/VOA position is both unreasonable and illogical and a valuation standard, on which their arguments are based, has no force in law. In this case HMRC conceded that Day Nurseries fell outside the categories of property where there was on separable goodwill. Similar success has been had with a range of other property types.
 
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