BIM70037 | Cash basis: expenses: capital expenditure: Intangible Assets

S33A(4)(e) ITTOIA 2005

In calculating the profits of a trade under the cash basis, a deduction is disallowed for a non-qualifying intangible asset.

Intangible assets include

• any internally-generated intangible asset, and

• intellectual property,

Intellectual Property means

1. any patent, trade mark, registered design, copyright or design, plant breeders’ rights or rights under section 7 of the Plant Varieties Act 1997

2. any right under the law of a country or territory outside the UK corresponding or similar to a right within 1. above

3. any information or technique not protected by a right within 1. and 2. above but having industrial, commercial or other economic value

4. any licence or other right in respect of anything within 1, 2 or 3 above

Non Qualifying Intangible Assets

Fixed Maximum duration

An intangible asset is non-qualifying unless it has a fixed maximum duration and will cease to exist within 20 years of the date the capital expenditure was incurred.

Where option or rights are granted over an intangible asset and

• intangible asset (asset A) is the right or option to acquire another intangible asset (asset B) and

• asset B does not have a fixed maximum duration (and is therefore a non- qualifying asset)

Asset A is a non-qualifying asset even if when it was exercised, it would cease to exist within 20 years of the grant or right of the option.

Licences

Where

1. the trader has an intangible asset and

2. the trader grants a licence or any other right in respect of that asset to another person and

3. the trader re-acquires any part of the licence or rights in respect of that asset by way of a sub-licence

The intangible asset created by the sub-licence in 3. above is not a qualifying asset.