»Ê¹ÚÌåÓýapp

Structure of CTA09/CHAPTER15A

»Ê¹ÚÌåÓýapp overall structure of CTA09/CHAPTER15A ‘Debits in respect of goodwill and certain other assetsâ€� is to allow relief for the cost of ‘relevant assetsâ€� at a fixed rate of 6.5% under Chapter 3 unless a restriction applies. As explained at CIRD44000, these rules should be read within the framework and context of the wider CTA09/PART8 provisions. »Ê¹ÚÌåÓýappse rules therefore only apply to relevant assets that are within the scope of the CTA09/PART8 rules.

What restrictions can apply?

CTA09/CHAPTER15A restrictions will apply in relation to relevant assets that are:

• Pre-FA 2019 assets
• Acquired other than as part of a business acquisition
• Acquired as part of a business acquisition but not together with qualifying IP
• Acquired at a cost exceeding 6 times the value of the qualifying IP assets acquired
• Acquired from a related individual or firm

Further details of the nature of restrictions are provided below.

CTA09/S879B

Requirement to write down at a fixed rate

CTA09/S879B(2) deems the company to have made a fixed rate election so that any debit relief computed under CTA09/PART8/CHAPTER 3 is computed by reference to CTA09/S731. But note the rate of 4% is adjusted to 6.5% by CTA09/S879B(3).

Identifying whether and what restriction applies

CTA09/PART8/CHAPTER15A includes several different restrictions that could apply to relevant assets. More than one restriction can apply but where there is a full restriction the partial restriction rules cannot also apply. Where no restriction applies relief under Chapter 3 is given at a fixed rate of 6.5%.

It is therefore necessary to consider whether any of the restrictions apply before calculating the debit relief. A summary of the full and partial restrictions is as follows:

• A full restriction for pre-FA 2019 relevant assets (see CIRD44075 onwards)
• A full restriction where relevant assets are acquired and either no business or no qualifying IP is acquired (see CIRD44080)
• A full restriction where a relevant asset is acquired from a related individual or firm where the third party acquisition condition is not met (see CIRD44083)
• A partial restriction where the cost of the relevant assets acquired are more than 6 times the cost of qualifying IP assets (see CIRD44086)
• A partial restriction in respect of certain acquisitions from a related individual or firm where the third party acquisition condition is met (see CIRD44090).

»Ê¹ÚÌåÓýapp nature of the full restriction is explained further on the next page (CIRD44070). »Ê¹ÚÌåÓýapp partial restriction rules are explained from CIRD44093 onwards. Note that the full and partial restrictions are applicable to debits arising under:

• Chapter 3 - fixed rate debits
• Chapter 4 - realisations
• Chapter 15 - adjustments on change of accounting basis