C1C4C3C5C7C2C6Part 8Intangible fixed assets
Pt. 8 modified (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 601, 1184(1) (with Sch. 2)
Pt. 8 modified (1.10.2011) by Postal Services Act 2011 (c. 5), s. 93(2)(3), Sch. 2 para. 6(1); S.I. 2011/2329, art. 3
Pt. 8 modified (15.11.2011 for specified purposes, 30.3.2012 for E.W.) by Localism Act 2011 (c. 20), ss., 240(5)(o), Sch. 24 para. 1(3); S.I. 2012/628, art. 3(b)
Pt. 8 modified (1.4.2012) by Budget Responsibility and National Audit Act 2011 (c. 4), s. 29, Sch. 4 para. 3(1); S.I. 2011/2576, art. 5
Pt. 8 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 88(1)(2)(7) (with s. 147, Sch. 17)
Pt. 8 modified (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 35, 45 (with Sch. 5 para. 36)
F1Chapter 16ADebits in respect of assets that were pre-FA 2002 assets etc
Pt. 8 Chs. 16A, 16B inserted (with effect in accordance with s. 31(14)(15) of the amending Act) by Finance Act 2020 (c. 14), s. 31(13)
Introduction
900AIntroduction
1
This Chapter contains special rules affecting the debits to be brought into account by a company for tax purposes in respect of an intangible fixed asset that is a restricted asset.
2
Sections 900B to 900D make provision determining when an intangible fixed asset of a company is a restricted asset for the purposes of this Chapter.
3
Sections 900E and 900F contain the special rules.
4
The following sections contain supplementary provisions—
a
section 900G (meaning of relieving acquisition),
b
section 900H (when two persons are related), and
c
section 900I (acquisition of asset in pursuance of an unconditional obligation).
When an intangible fixed asset is a restricted asset
900BWhen an intangible fixed asset is a restricted asset: the first case
1
An intangible fixed asset of a company is a restricted asset if—
a
the company acquired the asset on or after 1 July 2020,
b
the company acquired the asset from a person who at the time of the acquisition was a related party in relation to the company, and
c
the asset is within subsection (2) or (3).
2
The asset is within this subsection if—
a
the asset was a pre-FA 2002 asset in the hands of any company on 1 July 2020, and
b
at no time on or after 1 July 2020 has the asset been the subject of a relieving acquisition.
3
The asset is within this subsection if—
a
the asset was created before 1 April 2002,
b
immediately before 1 July 2020 the asset was held by a person other than a company, and
c
at no time on or after 1 July 2020 has the asset been the subject of a relieving acquisition.
4
But the asset is not within subsection (3) if the person mentioned in that subsection (“the intermediary”) acquired the asset on or after 1 April 2002 from a person (“the third party”) who meets the conditions in subsections (5), (6) and (7).
5
The third party meets the condition in this subsection if—
a
the third party is not a company, or
b
the third party is a company in relation to which the intermediary is not a related party at the time of the intermediary's acquisition.
6
The third party meets the condition in this subsection if at the time of the intermediary's acquisition the third party is not a related party in relation to a company in relation to which the intermediary is a related party.
7
The third party meets the condition in this subsection if at the time of the acquisition of the asset by the company mentioned in subsection (1) the third party is not a related party in relation to that company.
900CWhen an intangible fixed asset is a restricted asset: the second case
1
An intangible fixed asset of a company (“the asset concerned”) is a restricted asset if—
a
the company acquired the asset concerned on or after 1 July 2020,
b
the company acquired the asset concerned from a person who at the time of the acquisition was a related party in relation to the company, and
c
the asset concerned is within subsection (2).
2
The asset concerned is within this subsection if—
a
the asset concerned was created on or after 1 July 2020,
b
at no time has the asset concerned been the subject of a relieving acquisition,
c
the value of the asset concerned derives in whole or in part from another asset (“the other asset”), and
d
the other asset was a pre-FA 2002 asset or a restricted asset in the hands of any company on the date the asset concerned was created.
3
The condition in subsection (2)(d) is to be treated as met if—
a
the other asset was held by a person other than a company on the date the asset concerned was created,
b
on the date the asset concerned was created that person was a related party in relation to a company, and
c
the other asset would have been a pre-FA 2002 asset or a restricted asset in the hands of that company on the date the asset concerned was created had that company acquired the other asset from that person immediately before that date.
4
For the purposes of this section the cases in which the value of an asset may be derived from any other asset include any case where—
a
assets have been merged or divided,
b
assets have changed their nature, or
c
rights or interests in or over assets have been created or extinguished.
900DWhen an intangible fixed asset is a restricted asset: the third case
1
An intangible fixed asset of a company (“the asset concerned”) is a restricted asset if—
a
the company acquired the asset concerned on or after 1 July 2020, and
b
the asset concerned is within subsection (2).
2
The asset concerned is within this subsection if—
a
the asset concerned was acquired by any company on or after 1 July 2020 directly or indirectly as a consequence of, or otherwise in connection with, the realisation by another person of an asset (“the other asset”),
b
that company and that other person were related parties at the time of the realisation of the other asset,
c
the other asset was a pre-FA 2002 asset or a restricted asset in the hands of any company at any time during the period beginning with 1 July 2020 and ending with the time of the realisation mentioned in paragraph (a),
d
the other asset was not the subject of a relieving acquisition at any time during the period beginning with 1 July 2020 and ending with the time of the realisation mentioned in paragraph (a), and
e
the asset concerned has not been the subject of a relieving acquisition at any time after the realisation mentioned in paragraph (a).
3
The condition in subsection (2)(c) is to be treated as met if—
a
immediately before 1 July 2020 the other asset was held by a person that was not a company,
b
immediately before 1 July 2020 that person was a related party in relation to a company, and
c
the other asset would have been a pre-FA 2002 asset in the hands of that company on 1 July 2020 had that company acquired the asset from that person immediately before that date.
4
For the purposes of subsection (2) it does not matter whether—
a
the other asset is the same as the asset concerned,
b
the asset concerned is acquired at the time of the realisation of the other asset, or
c
the asset concerned is acquired by merging assets or otherwise.
The special rules
900ESpecial rule: section 900B case
1
This section applies in respect of a restricted asset of a company if it is a restricted asset by reason of section 900B.
2
If the company was the first company to acquire the asset on or after 1 July 2020, the relevant Chapters of this Part have effect as if the company acquired the asset at no cost.
3
If the company was not the first company to acquire the asset on or after 1 July 2020, the relevant Chapters of this Part have effect as if the company acquired the asset for the adjusted amount.
4
The adjusted amount is—
where—
A is the amount of consideration—
- a
for which the company actually acquired the asset, or
- b
if different, for which it would (ignoring this section) be treated for the purposes of the Taxes Acts as having acquired the asset, and
B is the market value of the asset on the date it was first acquired by a company on or after 1 July 2020.
5
Where B is greater than A the adjusted amount is nil.
6
In this section—
“market value”, in relation to an asset, means the price the asset might reasonably be expected to fetch on a sale in the open market, and
“the relevant Chapters of this Part” means—
- a
Chapter 3 (debits in respect of intangible fixed assets),
- b
Chapter 15 (adjustments on change of accounting policy), and
- c
Chapter 5 (calculation of tax written-down value) in so far as it has effect for the purposes of Chapters 3 and 15.
- a
900FSpecial rule: section 900C or 900D case
1
This section applies in respect of a restricted asset of a company if it is a restricted asset by reason of section 900C or 900D.
2
The relevant Chapters of this Part have effect as if the company acquired the asset for the adjusted amount.
3
The adjusted amount is calculated as follows—
Step 1 Find the amount—
- a
for which the company actually acquired the asset, or
- b
if different, for which it would (ignoring this section) be treated for the purposes of the Taxes Acts as having acquired the asset.
- a
Step 2 Deduct from the amount found at Step 1 such proportion of the notional deduction amount for the relevant other asset or each relevant other asset as is just and reasonable in the circumstances.
4
Where the deduction at Step 2 results in a negative value the adjusted amount is nil.
5
In subsection (3)—
“relevant other asset” means an asset by reference to which the conditions in paragraphs (c) and (d) of section 900C(2) or (as the case may be) the conditions in section 900D(2) were met, and
“the notional deduction amount”, in relation to a relevant other asset, means—
- a
in a case where section 900E(2) would have applied had the company acquired the relevant other asset instead of the restricted asset, an amount equal to the market value of the relevant other asset at the time the restricted asset was acquired, and
- b
in a case where section 900E(3) would have applied had the company acquired the relevant other asset instead of the restricted asset, an amount equal to the market value of the relevant other asset at the time it was first acquired by a company on or after 1 July 2020, and
- c
in a case where subsection (2) of this section would have applied had the company acquired the relevant other asset instead of the restricted asset, the amount that would have been deducted at step 2 of subsection (3) of this section if the company had acquired the relevant other asset instead of the restricted asset.
- a
6
In this section “market value” and “the relevant Chapters of this Part” have the same meaning as in section 900E.
Supplementary provisions
900GMeaning of “relieving acquisition”
For the purposes of this Chapter, an asset is the subject of a relieving acquisition if it is acquired by a company from a person who at the time of the acquisition is not a related party in relation to the company.
900HSupplementary provision about when two persons are related
1
References in this Chapter to one person being a related party in relation to another person are to be read as including references to the participation condition being met as between those persons.
2
References in subsection (1) to a person include a firm in a case where, for section 1259 purposes, references in this Chapter to a company are read as references to the firm.
3
In subsection (2) “section 1259 purposes” means the purposes of determining under section 1259 the amount of profits or losses to be allocated to a partner in a firm.
4
Section 148 of TIOPA 2010 (when the participation condition is met) applies for the purposes of subsection (1) as it applies for the purposes of section 147(1)(b) of TIOPA 2010.
900IAcquisition of asset in pursuance of an unconditional obligation
1
A company that acquires an intangible fixed asset in pursuance of an unconditional obligation under a contract is to be treated for the purposes of this Chapter as having acquired the asset on the date on which the company became subject to that obligation or (if later) the date on which that obligation became unconditional.
2
An obligation is unconditional if it may not be varied or extinguished by the exercise of a right (whether under contract or otherwise).
Pt. 8 modified (1.1.2010) by Northern Rock plc (Tax Consequences) Regulations 2009 (S.I. 2009/3227), regs. 1, 6(1)