Valid from 01/04/2009

Part 8 U.K. Intangible fixed assets

Chapter 7 U.K. Roll-over relief in case of realisation and reinvestment

When the relief is given U.K.

754 The relief: the “old asset” and “other assets” U.K.

(1) This Chapter provides for relief if a company realises an intangible fixed asset and incurs expenditure on other intangible fixed assets.

(2) In this Chapter references to the “old asset” are references to the asset that is realised and references to “other assets” are references to the other assets on which expenditure is incurred.

(3) A company is entitled to relief under this Chapter only if—

(a) the conditions in section 755 are met in relation to the old asset and its realisation,

(b) the conditions in section 756 are met in relation to the expenditure on other assets, and

(c) the company claims the relief in accordance with section 757.

(4) See also the following provisions (which extend or restrict the circumstances in which relief is available)—

(a) sections 777 to 779 (application of roll-over relief where there is reinvestment by group members),

(b) section 791 (application of roll-over relief in relation to degrouping charge),

(c) section 794 (application of roll-over relief in relation to reallocated charge),

(d) section 850 (part realisation involving related party acquisition: exclusion of roll-over relief), and

(e) sections 898 and 899 (roll-over relief for disposals of pre-FA 2002 assets).

755 Conditions relating to the old asset and its realisation U.K.

(1) The old asset must have been a chargeable intangible asset of the company throughout the period during which it was held by the company (but see subsection (5)).

(2) The proceeds of realisation of the old asset must exceed—

(a) the cost of the asset,

(b) in the case of a part realisation, the appropriate proportion of the cost of the asset (see section 759(1) and (2)), or

(c) in the case of the realisation of an asset that has previously been the subject of a part realisation, the adjusted cost of the asset (see section 759(3)).

(3) In subsection (2) “the cost of the asset” means the total capitalised expenditure on the asset recognised for tax purposes.

(4) The condition in subsection (2) is met if the old asset has no cost as defined in subsection (3).

(5) Subsection (6) applies if the old asset was a chargeable intangible asset of the company—

(a) at the time of its realisation, and

(b) for a substantial proportion of the period during which it was held by the company, but not for the whole of that period.

(6) The same proportion of the asset is treated for the purposes of this Chapter as if it were a separate asset in relation to which the condition in subsection (1) was wholly met.

(7) Any apportionment necessary for the purposes of subsections (5) and (6) must be made on a just and reasonable basis.

756 Conditions relating to expenditure on other assets U.K.

(1) The expenditure on other assets must be incurred in the period—

(a) beginning 12 months before the date of realisation of the old asset or at such earlier time as an officer of Revenue and Customs may by notice allow, and

(b) ending 3 years after the date of realisation of the old asset or at such later time as an officer of Revenue and Customs may by notice allow.

(2) The expenditure on other assets must be capitalised by the company for accounting purposes.

(3) Immediately after the expenditure is incurred the other assets must be chargeable intangible assets in relation to the company.

(4) For the purposes of this section expenditure is treated as incurred when it is recognised for accounting purposes.

757 Claim for relief U.K.

A claim by a company for relief under this Chapter must specify—

(a) the old assets to which the claim relates,

(b) the amount of the relief claimed in relation to each old asset, and

(c) in relation to each old asset, the expenditure on other assets by reference to which relief is claimed.