Finance Act 1989

Patent rights U.K.

27 (1) Section 521 of the Taxes Act 1988 shall be amended as follows.

(2) In subsection (5) (which limits allowable expenditure in the case ofcertain sales entered into between connected persons or for the purpose ofobtaining an allowance)—

(a) the words “within the terms of section 839” shall be omitted, and

(b) for the words “the disposal value” onwards there shall be substitutedthe words “the relevant amount determined in accordance with subsection (6)below”.

(3) After subsection (5) there shall be added—

“(6) The relevant amount referred to in subsection (5) above is—

(a) in a case in which, by virtue of subsections (2) to (4) above, a disposalvalue falls to be brought into account by reason of the sale, an amount equalto that disposal value,

(b) in a case in which no disposal value falls to be brought into account asmentioned in paragraph (a) above, but the seller receives on the sale acapital sum in respect of which he is chargeable to tax in accordance withsection 524, an amount equal to that sum,

(c) in any other case, an amount equal to whichever of the following is thesmallest—

(i) the price which the rights would have fetched if sold in the open market,

(ii) where capital expenditure was incurred by the seller on acquiring therights, the amount of that expenditure,

(iii) where capital expenditure was incurred by any person connected with theseller on acquiring the rights, the amount of the expenditure incurred by thatperson.

(7) Section 839 (connected persons) shall apply for the purposes of thissection.”

(4) This paragraph shall have effect in relation to expenditure incurred onor after the day on which this Act is passed.

28–30 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1

Textual Amendments

F1 Sch. 13 paras. 1–26, 28–30 repealed by Capital Allowance Act 1990 (c. 1), s. 164(4)(5), Sch. 2