4 February 2011 - First-Tier Tribunal (Tax) dismisses appeal in HSP Financial Planning Ltd v HMRC

The First-Tier Tribunal (Tax) has dismissed an appeal against an amendment to a company's tax return disallowing a deduction for the amortisation of the goodwill of a business. The amendment was made by HMRC, for whom Christopher Tidmarsh QC appeared, on the grounds that the goodwill failed to fall within paragraph 118 of Schedule 29 to the Finance Act 2002, which only allowed a deduction to be claimed where the goodwill concerned was acquired by the company from a person who at the time of the acquisition was not a 'related party'. The goodwill was purchased by the company from three partners who became entitled to have shares alloted to them in the company on the signing of the sale agreement. The Tribunal held that this meant that they were 'participators' in the company within the meaning of section 417 (1) of the Taxes Act 1988 and therefore in turn related parties pursuant to the definition set out in paragraph 95 of Schedule 29.

The Tribunal's judgment can be found here.