CIRD44080 | Intangible assets: Restrictions for goodwill and relevant assets: No business or no qualifying IP acquired

CTA09/S879I

CTA09/S879I restricts debit relief in relation to acquisitions of relevant assets that are either

• not acquired as part of business acquisition (CTA09/S879I(1), or

• acquired as part of a business acquisition but that acquisition does not include any qualifying IP.

CT09/S879I broadly replicates the restriction that previously existed in CTA09/S816A.

Business acquisitions

The words “business” and “acquisition” are not defined and so take their ordinary meaning. Whether or not a business has been acquired is a question of fact but where purchased goodwill has been recognised correctly in accordance with GAAP, or is capable of being recognised in accordance with GAAP, you can accept that a business has been acquired.

Intangible Fixed Asset

Note that, in order to be taken into account, qualifying IP must be acquired for use on a continuing basis in the course of the business (so that it becomes an “intangible fixed asset” in relation to the acquiring company). If, therefore, a company doesn’t intend to use it, that IP cannot be qualifying IP even if it was an intangible fixed asset immediately before the acquisition. See also CIRD11170 for the definition of intangible fixed asset.

When the restriction applies

The restriction applies to debits arising under Chapters 3, 4 and 15. For further details of the restrictions see CIRD44070.