Corporation Tax Act 2009 (c. 4)

Part 8 U.K. Intangible fixed assets

Chapter 15 U.K. Adjustments on change of accounting policy

Change of policy involving disaggregation U.K.

875 Effect of application of section 874 in later period and subsequently U.K.

(1) A credit or debit that is required to be brought into account under section 874 is treated as arising at the beginning of the later period (“the relevant time”).

(2) If section 874(2) applies, the tax written-down value of each resulting asset at the relevant time is—

where—

WDVE is the tax written-down value of the original asset at the end of the earlier period,

C is the credit,

AV is the accounting value of the resulting asset in question at the relevant time, and

TAV is the sum of the accounting values of all the resulting assets at the relevant time.

(3) If section 874(3) applies, the tax written-down value of each resulting asset at the relevant time is—

where—

WDVE, AV and TAV have the same meaning as in subsection (2), and

D is the debit.

(4) After the relevant time the cost recognised for tax purposes for each resulting asset is taken to be the sum of—

(a) the tax written-down value given by subsection (2) or, as the case may be, subsection (3), and

(b) the cost recognised for tax purposes of any subsequent expenditure on the asset that is capitalised for accounting purposes.

(5) After the relevant time the tax written-down value for each resulting asset is determined taking account only of subsequent credits and debits.