Business transferred as a going concern
HMRC consider that because goodwill is inseparable from the business in which it is generated, the disposal of a business as a going concern must involve the transfer of goodwill1. Where the transfer agreement provides for one payment which is not split between the various assets being transferred, apportionment is necessary.
In Butler v Evans2, it was found as a fact by the Commissioners that a shop lease and the goodwill built up since the business was carried on were separate assets. See C2.101 regarding HMRC guidance dealing with particular issues that arise when identifying the sum that can be apportioned to goodwill on a transfer of a business as a going concern.
In Leeds Cricket Football & Athletic Company Limited (Leeds CFA)3, Leeds CFA owned the freehold to Headingley cricket ground which it leased to Yorkshire County Cricket Club (YCCC) in order that YCCC could play cricket there. In December 2005 Leeds CFA sold the property to YCCC. FTT decided that this was a disposal of a business with attached goodwill and was not a disposal of land with attached income streams. The FTT observed that just because an income stream is ancillary to the ownership of an interest in the land, and would not exist without the land, that does not necessarily mean that a business is not being conducted.
Any goodwill attributable to the personal skills of the proprietor, such as a chef or a hairdresser, will not be transferred