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Legislation
Corporation Tax Act 2009

Crossheading Change of policy involving change of value

  • Section 872 Adjustments in respect of change
  • Section 873 Effect of application of section 872 in later period and subsequently
  1. Change of policy involving change of value
  2. Adjustments in respect of change

Section 872 | Adjustments in respect of change

From legislation.gov.uk

(1)This section and section 873 apply if—

(a)as a result of the change of accounting policy there is a difference (“the accounting difference”) between—

(i)the accounting value of an intangible fixed asset of the company at the end of the earlier period, and

(ii)the accounting value of that asset at the beginning of the later period, and

(b)no election has been made in respect of the asset under section 730 (writing down at fixed rate: election for fixed-rate basis).

(2)If there is an increase in that value, a corresponding credit must be brought into account for tax purposes in the later period.

(3)If there is a decrease in that value, a corresponding debit must be brought into account for tax purposes in the later period.

(4)The amount of the credit or debit is—

Formula

D×WDVEAVE

where—

D is the accounting difference,

WDVE is the tax written-down value of the asset at the end of the earlier period, and

AVE is the accounting value of the asset at the end of the earlier period.

(5)But if subsection (2) applies, the credit must not exceed—

(a)the sum of debits brought into account for tax purposes in respect of the asset before the later period, less

(b)the sum of the credits so brought into account.

(6)This section is subject to section 878 (exclusion of credits or debits brought into account under other provisions).

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