CG68070 - Goodwill: goodwill ceasing to exist: TCGA92/S24(1)
TCGA92/S24(1) provides that the occasion of the entire loss, destruction, dissipation or extinction of an asset shall constitute a disposal for CG purposes.If a person ceases to carry on a business without disposing of it as a going concern any goodwill in that business may be presumed to have ceased to exist provided that the cessation is permanent. A loss may therefore arise by reference to the original cost of goodwill, if any, or its 31 March 1982 market value as appropriate.If, however, the suspension of the business is a temporary measure we would consider that goodwill continues to exist pending a recommencement of business activities. Where no positive decision is made to cease trading permanently we would not accept that TCGA92/S24(1) applies to deem a disposal of goodwill.A deemed disposal under TCGA92/S24(1) occurs at the date of cessation and there are no provisions for any loss to be treated as accruing at an earlier date.TCGA92/S24(1) and TCGA92/S24(2) are mutually exclusive. A claim under TCGA92/S24(2) that goodwill has become of negligible value cannot be made on or after the permanent cessation of a business for the reasons given at CG68080.