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Amendment of section 291A of Principal Act (intangible assets)
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28. (1) Section 291A of the Principal Act is amended—
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(a) in subsection (6)(a) by substituting “paragraphs (b), (ba) and (c)” for “paragraphs (b) and (c)”,
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(b) in subsection (6)(b)—
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(i) by substituting “paragraph (a) and, where applicable, paragraph (ba)” for “paragraph (a)” where it first occurs in each of subparagraphs (i) and (ii), and
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(ii) by substituting “paragraphs (a) and (ba)” for “paragraph (a)” in each other place where it occurs in each of subparagraphs (i) and (ii),
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and
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(c) by inserting the following after paragraph (b) of subsection (6):
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“(ba) Where the relevant trade (referred to in paragraph (a)) carried on by the company for an accounting period comprises relevant activities relating to a specified intangible asset or specified intangible assets the capital expenditure on which asset or assets includes—
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(i) capital expenditure incurred by the company before 11 October 2017 (referred to in this paragraph as ‘the earlier period’), and
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(ii) capital expenditure incurred by the company on or after 11 October 2017 (referred to in this paragraph as ‘the later period’),
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then, the trading income from the relevant trade for the accounting period shall, for the purposes of paragraphs (a) and (b), be deemed to consist of two separate income streams, the first income stream consisting of so much of the trading income from the relevant trade for the accounting period as relates to capital expenditure incurred in the earlier period (referred to in this paragraph and the following paragraph as the ‘first income stream’), and the second income stream consisting of so much of the trading income from the relevant trade for the accounting period as relates to capital expenditure incurred in the later period (referred to in this paragraph and the following paragraph as the ‘second income stream’). The amount of income to be attributed to each separate income stream shall be determined in accordance with paragraph (bb)(i), and paragraph (a) shall apply with any necessary modifications such that—
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(I) the aggregate of the amounts referred to in subparagraphs (i) and (ii) of paragraph (a) which relate to capital expenditure incurred in the earlier period shall not exceed the amount of the first income stream, and
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(II) the aggregate of the amounts referred to in subparagraphs (i) and (ii) of paragraph (a) which relate to capital expenditure incurred in the later period shall not exceed 80 per cent of the amount of the second income stream.
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(bb) (i) For the purposes of paragraph (ba) the trading income from the relevant trade for the accounting period shall, as necessary, be apportioned between the first income stream and the second income stream on a just and reasonable basis, and any amount to be attributed to the first income stream shall not exceed an arm’s length amount.
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(ii) The company shall maintain and have available such records as may reasonably be required for the purposes of determining whether any such apportionment referred to in subparagraph (i) is made on a just and reasonable basis and whether any amount attributed to the first income stream exceeds an arm’s length amount.”.
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(2) This section shall be deemed to have applied in respect of capital expenditure incurred by a company on or after 11 October 2017.
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