Capital Allowances Act 2001

481 Anti-avoidance: limit on qualifying expenditure

(1) In the two cases given below, the amount (if any) by which the capital expenditure incurred by a person (“the buyer”) on the purchase of patent rights exceeds the relevant limit is to be left out of account in determining the buyer’s qualifying expenditure.

(2) The first case is where the buyer and the seller are connected with each other.

(3) The second case is where it appears that the sole or main benefit which (but for this section) might have been expected to accrue to the parties from—

(a) the sale, or

(b) transactions of which the sale is one,

was obtaining an allowance under this Part.

(4) If the seller is required to bring a disposal value into account under this Part because of the sale, the relevant limit is that disposal value.

(5) If subsection (4) does not apply but the seller—

(a) receives a capital sum on the sale, and

(b) is chargeable to tax in respect of that sum in accordance with section 524 of ICTA,

the relevant limit is that sum.

(6) If neither subsection (4) nor subsection (5) applies, the relevant limit is whichever of the following is the smallest—

(a) the market value of the rights;

(b) if the seller incurred capital expenditure on acquiring the rights, the amount of that expenditure;

(c) if a person connected with the seller incurred capital expenditure on acquiring the rights, the amount of that expenditure.