I don't see the relevance of being Vat registered or not and I would say it is a legitimate business expense.
It is the "goodwill" problem. If you are VAT registered you can claim back tax on "goodwill" purchases. If you are not, then you can not. Goodwill is not tax deductable for a soul trader.
Now we all know that it is a profitable trade, the problem is it just looks like a loss on paper. It looks on paper as if you have bought nothing but a list of names, no contracts, and it is all based on goodwill.
Tax Evasion vs Tax Avoidance. There is a difference between these two. One is illegal, one is very legal.
To evade tax is illegal. So we must instead "avoid" tax.
This is my idea, see if it sounds OK to you lot.
Instead of buying a list of goodwill, the seller instead subs us the work for the first 6 months. This work is sub'd at 50% with the person subbing out the work getting their share in advance, you do this in return for the fact he is willing to transfer the list of names to you for £1 in 6 months time, all the money changes hands on the same day, it is just for 6 months he still owns it and you work it for him at a 50% charge.
Lets say he has £1000 of work to sell.
Instead of buying it for £3000 you actually buy it for £1 and sub the work from him for 6 months @ 50% and pay his share now.
This way you have not "bought" £3000 of goodwill. You have bought £1 of goodwill and worked for 50% of £6000. He has sold you goodwill for £1 and sub'd you work which he makes 50% of £6000 on.
It is avoidance, not evasion.
Anyway, thats my idea, does anyone think it sounds ok? You would obviously need to check with an accountant before doing it and probably the HMRC just incase it is counted as evasion.