The following Tax practice note Produced in partnership with Anne Fairpo of Temple Tax Chambers provides comprehensive and up to date legal information covering:
Capital allowances are available for qualifying capital expenditure on know-how where the acquirer is not within the corporate intangibles tax regime in respect of the know-how (for more, see Practice Notes: How intangible fixed assets are taxed—basic principles and Amortisation of intangible fixed assets).
‘Know-how’ is specifically industrial information or techniques which are likely to assist in:
manufacturing or processing goods or materials
agricultural, forestry or fishing operations
HMRC does not accept that commercial know-how (ie market research, customer lists and sales techniques etc) qualify for know-how allowances, as this type of know-how is not industrial information or techniques relating to manufacturing or processing.
Know-how is often licensed as part of a franchise agreement. In such cases, it is necessary to determine the types of know-how being licensed to see whether any will qualify for know-how allowances.
Expenditure on know-how acquired in a 'control' transaction does not qualify for know-how allowances.
'Control' transactions are those where:
the seller is a body of persons controlled by the buyer
the buyer is a body of persons controlled by the seller, or
the buyer and seller are both bodies of persons controlled by the same person
A 'body of persons' includes a partnership.
These allowances are principally available to individuals and other unincorporated entities for new acquisitions.
For companies, capital allowances are only available for qualifying capital expenditure on know-how where
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