[BIM57620] BIM57620 – Franchising: initial fee paid by franchisee
Intangible assets regime for companies
Where a company acquires or sells a franchise, the Corporation Tax intangible assets regime applies. The regime is introduced at BIM35501, and covered more fully in the CIRD manual. Where the intangible assets regime applies then it takes precedence over the guidance here.
Trade profits treatment
The initial payment by the franchisee, whether payable in one sum or instalments, is usually capital, as are any related legal fees. Capital payments are not allowable deductions in computing the taxable profits of a trade. See generally BIM35000 onwards.