Finance Act 2002

Writing down on accounting basis

9 (1) Where in a period of account a loss is recognised in the company’s profit and loss account in respect of capitalised expenditure on an intangible fixed asset—

(a) by way of amortisation, or

(b) as a result of an impairment review,

a corresponding debit shall be brought into account for tax purposes.

(2) The reference in sub-paragraph (1) to an “impairment review” does not include the valuation of an asset for the purpose of determining the amount of expenditure to be capitalised in the first place.

(3) The amount of the debit for tax purposes in respect of expenditure on an asset is, in the period of account in which the expenditure is capitalised:

where—

• Accounting Loss is the amount of the loss recognised for accounting purposes,

• Tax Cost is the amount of expenditure on the asset that is recognised for tax purposes, and

• Accounting Cost is the amount capitalised in respect of expenditure on the asset.

(4) Subject to any adjustment required for tax purposes, the amount of the expenditure on the asset that is recognised for tax purposes is the same as the amount of expenditure on the asset capitalised by the company.

(5) The amount of the debit for tax purposes in respect of expenditure on an asset is, in a subsequent period of account:

where—

• Accounting Loss is the amount of the loss recognised for accounting purposes,

• Tax Value is the tax written down value of the asset immediately before the amortisation charge is made or, as the case may be, the impairment loss is recognised for accounting purposes, and

• Accounting Value is the value of the asset recognised for accounting purposes immediately before the amortisation charge or, as the case may be, the impairment review.

(6) In this paragraph “capitalised” means capitalised for accounting purposes.