Income and Corporation Taxes Act 1988

522 Allowances for expenditure on purchase of patent rights: pre-1st April 1986 expenditure. U.K.

M1 (1) Subject to subsection (2) below, where a person incurred capital expenditure before 1st April 1986 on the purchase of patent rights, there shall, subject to and in accordance with the following provisions of this Chapter, be made to him writing-down allowances in respect of that expenditure during the writing-down period.

(2) No writing-down allowance shall be made to a person under subsection (1) above in respect of any expenditure unless—

(a) the allowance falls in accordance with section 528(1) to be made to him in taxing his trade; or

(b) any income receivable by him in respect of the rights would be liable to tax.

(3) Subject to subsections (4) to (6) below, the writing-down period referred to in subsection (1) above is 17 years beginning with the chargeable period related to the expenditure.

(4) Where the rights are purchased for a specified period, subsection (3) above shall have effect with the substitution for the reference to 17 years of a reference to 17 years or the number of years comprised within that period, whichever is the less.

(5) Where the rights purchased begin one complete year or more after the commencement of the patent and subsection (4) above does not apply, subsection (3) above shall have effect with the substitution for the reference to 17 years of a reference to 17 years less the number of complete years which, when the rights began, have elapsed since the commencement of the patent or, if 17 complete years have so elapsed, of a reference to one year.

(6) Any expenditure incurred for the purposes of a trade by a person about to carry it on shall be treated for the purposes of subsections (3) to (5) above as if it had been incurred by that person on the first day on which he does carry it on, unless, before that first day, he has sold all the rights on the purchase of which the expenditure was incurred.

(7) Subsections (2) and (3) of section [F1 146 of the 1990 Act] (effect of providing for writing-down allowances during a writing-down period of a specified length) shall apply to this section as they apply to the provisions specified in subsection (1) of that section.

Textual Amendments

F1 Words in s. 522(7) substituted (with effect in accordance with and with application in accordance with s. 164(1)(2) of the amending Act) by Capital Allowances Act 1990 (c. 1), Sch. 1, para. 8(25), s. 164(3)

Marginal Citations

M1 Source - 1970 s.378; 1985 s.64(1)