Finance Act 2010

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Chapter 5

Corporation Tax

Intangible assets, etc.

43.— (1) The Principal Act is amended—

(a) in section 288(3C) by substituting “10 years” for “15 years”,

(b) in section 291—

(i) in subsection (1) by substituting “Subject to subsection (3), where a person carrying on a trade has incurred” for “Where a person carrying on a trade incurs”, and

(ii) in subsection (2)—

(I) by substituting “Subject to subsection (3), in any case where” for “In any case where”,

(II) in paragraph (a) by substituting “has incurred” for “incurs”, and

(III) in paragraph (b) by substituting “having incurred” for “incurring”,

(c) in section 291 by inserting the following after subsection (2):

“(3) Subject to subsection (4), where the person is a company, this section shall operate as if computer software or a right to use or otherwise deal with computer software were construed as being any such software or any such right—

(a) which is provided for computer systems or processes or computer operated machinery or equipment for use in the operation of the trade carried on by the company, and

(b) (i) the provision of which does not limit or restrict the person from whom the company acquired the software or the right in—

(I) the use of that software or exercise of that right, or

(II) the provision of that software or granting of that right to other persons,

or

(ii) which is not provided for activities of managing, developing or exploiting that software or that right for the purposes of receiving a royalty or other sum in respect of the use of that software or the exercise of that right by other persons.

(4) (a) Subject to paragraph (b), where a company elects in writing, subsection (3) shall not apply to expenditure, specified in the election, incurred by it after 4 February 2010 and before 4 February 2012 on computer software or on a right to use or otherwise deal with computer software.

(b) An election under paragraph (a) shall be made in the return required to be made under section 951 for the accounting period of the company in which the expenditure is incurred and shall not be made later than 12 months from the end of the accounting period in which the capital expenditure, giving rise to the claim, is incurred.”,

(d) in section 291A(1) in the definition of “specified intangible asset” by inserting the following after paragraph (c):

“(ca) computer software or a right to use or otherwise deal with computer software other than such software or such right construed in accordance with section 291(3),”,

(e) in section 291A(1) in the definition of “specified intangible asset” by inserting the following after paragraph (f):

“(fa) any application for the grant or registration of anything within paragraphs (a) to (f),”,

(f) in section 291A(1) in the definition of “specified intangible asset” by substituting the following for paragraph (g):

“(g) secret processes or formulae or other secret information concerning industrial, commercial or scientific experience, whether protected or not by patent, copyright or a related right, including know-how within the meaning of section 768,”,

(g) in section 291A(1)(h) by inserting “, but this paragraph does not relate to a licence within the meaning of section 2 of the Intoxicating Liquor Act 2008 ” after “intended”,

(h) in section 291A(2) by substituting “has incurred” for “incurs”,

(i) in section 291A(3)—

(i) in paragraph (a) of the construction of “A” in the formula in that subsection by substituting “amortisation and any impairment” for “amortisation or depreciation”, and

(ii) in the construction of “B” in the formula in that subsection by substituting “amortisation and any impairment” for “amortisation or depreciation”,

and

(j) in section 291A(5) by substituting the following for paragraph (a):

“(a) In relation to the activities of a company carried on as part of a trade—

(i) the whole of such activities, if any, that—

(I) comprise the sale of goods or services which are goods or services that derive the greater part of their value from, or

(II) consist of managing, developing or exploiting,

a specified intangible asset or specified intangible assets in respect of which allowances under this Chapter have been made to the company, and

(ii) such parts of other such activities, if any, being parts that—

(I) consist of managing, developing or exploiting such assets, or

(II) contribute to the value of goods or services by using such assets,

are referred to in paragraph (b) as ‘relevant activities’ and shall be treated for the purposes of the Tax Acts, other than any provisions of those Acts relating to the commencement or cessation of a trade, as a separate trade (in paragraph (b) and subsection (6) referred to as a ‘relevant trade’) which is distinct from any other trade or part of a trade carried on by the company.”.

(2) (a) Paragraphs (a) to (f) and (h) to (j) of subsection (1) apply to expenditure incurred by a company after 4 February 2010.

(b) Paragraph (g) of subsection (1) has effect as respects any allowance to be made for an accounting period commencing on or after 1 January 2010.