Corporation Tax Act 2009 section 724

Negative goodwill

Section 724 deals with how a taxable credit arises when a company recognises a gain from negative goodwill following the acquisition of a business.

• When a company acquires a business and negative goodwill arises, any gain recognised in the accounts may give rise to a taxable credit.
• The taxable credit corresponds to the gain recognised in the company's profit or loss for accounting purposes.
• Only the portion of the gain that is fairly and reasonably attributable to intangible fixed assets qualifies as the taxable credit.
• The apportionment between intangible fixed assets and other assets must be carried out on a just and reasonable basis.