LAM14060 | Finance Act 2012 Transitional provisions: Intangible fixed assets: FA12/SCH17/PART2/PARA24

Under the pre-FA12 regime the legislation relating to intangible fixed assets at CTA09/PART8 did not apply to assets held for the long-term business of an insurance company.

FA12 amended the legislation in CTA09/S901 to bring life insurance companies taxed on the I-E basis within the scope of the intangibles regime. The transitional provisions at paragraph 24 ensure that expenditure on any asset prior to 1 January 2013 is not taken into account in applying the rules in CTA09/PART8.

The treatment in the BLAGAB and non-BLAGAB trading computations should apply using normal principles, for example, by adding back pre-2013 amortisation.

FA12/S88 deals with the treatment of intangible asset credits and debits in the I-E computation:

• intangible asset credits and debits referable to BLAGAB are netted;

• a net credit is taxable as income (Step 1 of FA12/S73)

• a net debit is treated as BLAGAB expenses for the period (until accounting periods beginning after 15 September 2016 net debits were only relieved in the following accounting period)

Tax deductions for intangibles do not tend to be significant items in life insurance company computations.

Where these do arise, careful attention should be paid to the application of the provisions.