D1.611 Accounting for intangibles by companies
The gains and losses of a company which are taxed under the corporate intangible regime are the gains and losses calculated for accounting purposes1 (see also D1.610). The expression 'for accounting purposes' is not defined in the corporate intangible regime, but is defined elsewhere in the legislation as 'for the purposes of accounts drawn up in accordance with generally accepted accounting practice (GAAP)'2.
In computing taxable amounts, the legislation uses as its starting point the amounts recognised in determining a company's profit or loss for a period3. This covers an amount recognised in:
• the company's profit and loss account, income statement or statement of comprehensive income for that period
• a company statement of total recognised gains and losses, statement of recognised income and expense, statement of changes in equity, or statement of income and retained earnings for that period, or
• any other statement of items brought into account in calculating the company's profits and losses for that period
It does not, however, include amounts recognised to correct a fundamental error4.
The definition of GAAP for corporation tax in relation to accounts of UK companies, that are not accounts prepared in accordance with international accounting standards, means UK GAAP and where the company prepares accounts under international accounting standards it means IAS/IFRS accounts5, for more details see below.
In Roger Preston Group Ltd6, the First Tier Tribunal considered whether the accounting treatment of a licence over the use of intangible assets which had been acquired