BIM72037 | 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, trademark, 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 & 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

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.