Corporation Tax Act 2009

779 Rules that apply to cases within section 778(1)

(1) The expenditure by A on the acquisition is treated as expenditure on acquiring the underlying assets.

(2) The amount of the expenditure so treated is taken to be the lower of—

(a) the tax written-down value of the underlying assets immediately before the acquisition, and

(b) the amount or value of the consideration for the acquisition.

(3) The requirement in section 756(3) (that immediately after the expenditure on acquiring the assets is incurred the assets must be chargeable intangible assets in relation to A) is treated as met in relation to the underlying assets if the condition in subsection (4) is met.

(4) That condition is that the underlying assets are chargeable intangible assets in relation to the company by which they are held immediately after the acquisition by A.

(5) The tax written-down value of the underlying assets in the hands of the company by which they are held is reduced by the amount available for relief (but see subsections (6) and (7)).

(6) If—

(a) there is more than one underlying asset, and

(b) the amount of expenditure on other assets that is treated as incurred exceeds the amount available for relief,

the company which holds the underlying assets may decide how the amount available for relief is to be allocated in reducing the tax written-down values of the assets.

(7) If there are two or more such companies, they may agree between them how that amount is to be allocated.

(8) In this section references to “A” and “B” and “underlying assets” must be read in accordance with section 778(1).