Scope of intangibles regime

By Tolley

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Scope of intangibles regime
  • Deciding whether an asset falls into the corporate intangibles regime
  • Date of acquisition or creation
  • Definition of ‘Intangible Fixed Asset’
  • Understanding goodwill

For companies, the taxation of intangible fixed assets acquired or created after 1 April 2002 is governed by Corporation Tax Act 2009, Part 8. This regime was introduced in Finance Act 2002 (subscription sensitive). Prior to this, there was no harmonised regime dealing with the taxation of corporate intangibles.

As the tax treatment of intangible assets for companies is considerably different between the two regimes, it is crucial to determine which set of rules applies.

In broad terms, the corporate intangibles regime applies to:

  • intangible assets acquired from third parties (other than related parties) after 31 March 2002
  • internally generated intangible assets on which expenditure is commenced after 31 March 2002

Intangible assets acquired or internally generated before 1 April 2002 continue to be taxed under the general rules. For example, goodwill generated by a business carried on before 1 April 2002 remains within the capital gains regime. For details, see Simon’s Taxes D1.608 (subscription sensitive).

Deciding whether an asset falls into the corporate intangibles regime

In order to determine whether the corporate intangibles regime applies, the information required is as follows:

  • date of acquisition or creation
  • does the asset fall within the definition of an intangible fixed asset (ie within current GAAP definition and the CTA 2009, Part 8 definition)
Date of acquisition or creation

As well as considering whether the asset falls within the definition of intangible fixed assets, it must also be decided whether the asset was acquired or created before or after 1 April 2002. Which date is used is dependent on the circumstances of the acquisition or creation:

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