Ask an expert: Can part of sale proceeds be attributed to goodwill?

Question

My client’s parents acquired a 20 year lease on a takeaway business as a going concern for £70 000. The purchase agreement included a figure of £50 000 for goodwill. My client ran the shop paid rent direct to the landlord and filed sole trader accounts for the business. He has no rental agreement with the parents who should perhaps have been reporting rental income in their tax returns and claiming the onward payment to the superior landlord as a deductible expense. The parents have received an offer of £100 000 from an unconnected third party to buy the remainder of the lease (16.5 years) and take over the business. How should the goodwill be treated in the sale? In terms of the tax position it will not make a great deal of difference to the sellers whether some of the proceeds are attributed to...