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)
Chapter 2Credits in respect of intangible fixed assets
720Introduction
1
This Chapter provides for credits to be brought into account by a company for tax purposes in respect of—
a
receipts in respect of intangible fixed assets that are recognised in determining the company's profit or loss as they accrue (see section 721),
b
receipts in respect of royalties, so far as the receipts do not give rise to a credit under section 721 (see section 722),
c
revaluation of an intangible fixed asset (see section 723),
d
credits recognised for accounting purposes in respect of negative goodwill (see section 724), and
e
the reversal of previous accounting debits in respect of an intangible fixed asset (see section 725).
2
This Chapter does not apply in relation to amounts brought into account in connection with the realisation of an intangible fixed asset within the meaning of Chapter 4 (see section 734).
3
For the rules about those amounts, see that Chapter.
721Receipts recognised as they accrue
1
If in a period of account a gain representing a receipt in respect of an intangible fixed asset is recognised in determining the company's profit or loss, a corresponding credit must be brought into account for tax purposes.
2
The amount of the credit is the same as the amount of the gain recognised by the company for accounting purposes.
3
Subsection (2) is subject to any adjustments required by this Part or F1Part 4 of TIOPA 2010 (provision not at arm's length).
722Receipts in respect of royalties so far as not dealt with under section 721
1
So far as a receipt in respect of any royalty does not give rise to a credit under section 721 in the period of account in which it is received or in a subsequent period of account, a credit must be brought into account for tax purposes.
2
The credit must be brought into account in the accounting period in which the receipt is recognised for accounting purposes.
3
The amount of the credit is equal to so much of the amount of the receipt as does not give rise to a credit under section 721.
723Revaluation
1
If in a period of account there is an increase in the accounting value of an intangible fixed asset on a revaluation, a credit must be brought into account for tax purposes.
2
The amount of the credit is the lesser of—
a
the amount corresponding for tax purposes to the increase (see subsection (3)), and
b
the net total of relevant previous tax debits (see subsection (4)).
3
The amount corresponding for tax purposes to the increase is—
where—
I is the increase,
WDV is the tax written-down value of the asset immediately before the revaluation, and
AV is the accounting value of the asset by reference to which the revaluation is carried out.
4
The net total of relevant previous tax debits is—
where—
D is the total debits previously brought into account for tax purposes in respect of the asset, and
C is the total credits so brought into account.
5
For the purposes of this section “revaluation” includes—
a
the valuation of an asset for which a value is shown in the company's balance sheet, but which has not previously been the subject of a valuation, and
b
the restoration of past losses.
6
This section does not apply to an asset in respect of which an election has been made under section 730 (writing down at fixed rate: election for fixed-rate basis).
724Negative goodwill
1
If in a period of account a gain is recognised in determining the company's profit or loss in respect of negative goodwill arising on an acquisition of a business, a corresponding credit must be brought into account for tax purposes.
2
The amount of the credit is so much of the gain recognised for accounting purposes as, on a just and reasonable apportionment, is attributable to intangible fixed assets.
725Reversal of previous accounting loss
1
This section applies if—
a
in a period of account a gain is recognised in determining the company's profit or loss (“the recognised gain”),
b
the gain wholly or partly reverses a loss recognised in a previous period of account (“the reversed loss”), and
c
a debit was brought into account for tax purposes under Chapter 3 (debits in respect of intangible fixed assets) in respect of that loss (“the tax debit”).
2
A corresponding credit must be brought into account for tax purposes.
3
The amount of the credit is—
where—
RG is the recognised gain,
D is the tax debit, and
RL is the reversed loss.
4
This section does not apply to a gain on a revaluation within the meaning of section 723 (see subsection (5) of that section).
Pt. 8 modified (1.1.2010) by Northern Rock plc (Tax Consequences) Regulations 2009 (S.I. 2009/3227), regs. 1, 6(1)