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FACTS

»Ê¹ÚÌåÓýapp vendor acquired the asset (goodwill) in April 2003 for £100,000.

»Ê¹ÚÌåÓýapp vendor sells the asset at arm’s length to the purchaser on 30 April 2011.

»Ê¹ÚÌåÓýapp consideration is

• cash £500,000, plus
• the right to two payments of deferred consideration in cash, the amount depending on the profits of the business for the next two years.

»Ê¹ÚÌåÓýapp market value of the right to deferred consideration at the time of disposal is agreed by Shares and Assets Valuation at £300,000.

In September 2012 the vendor receives £220,000 in part satisfaction of the right to deferred consideration. »Ê¹ÚÌåÓýapp market value of the remainder of the right is agreed by Shares and Assets Valuation at £90,000.

In October 2013 the vendor receives £150,000 in full satisfaction of the remainder of the right to deferred consideration.

COMPUTATION

A: IMMEDIATE CHARGEABLE GAIN

Consideration received cash (500,000)
plus value of right (300,000) £800,000

Less Cost £100,000

CHARAGEABLE GAIN 2011-12 £700,000

B: WHEN DEFERRED CONSIDERATION RECEIVED

September 2012

Consideration £220.000

Minus Apportioned cost 300,000x220,000
(220,000+90,000)

Chargeable Gain 2012-13 £7,097

Consideration £150,000

Less Cost 300,000-212,903 £87,097

CHARGEABLE GAIN 2013-14 £62,903

»Ê¹ÚÌåÓýappre are more examples where the asset sold is shares or debentures in CG58000+