Part 7

Know-how allowances
Chapter 2

Qualifying expenditure

Qualifying expenditure
454
1
In this Part “qualifying expenditure” means, subject to section 455, capital expenditure incurred on the acquisition of know-how by a person if—
a
the person is carrying on a trade at the time of the acquisition and the know-how is acquired for use in that trade,
b
the person acquires the know-how and subsequently sets up and commences a trade in which it is used,
c
the person acquires the know-how together with the trade or part of a trade in which it was used and the parties to the acquisition make an election under section 194 of ITTOIA 2005 or under section 178 of CTA 2009 (consideration for know-how on disposal of trade to be treated as payment for goodwill unless parties otherwise elect), or
d
the person acquires the know-how together with the trade or part of a trade in which it was used and the trade in question was, before the acquisition, carried on wholly outside the United Kingdom.
2
The same expenditure may not be taken into account as qualifying expenditure in relation to more than one trade.
3
Qualifying expenditure incurred before the setting up and commencement of the relevant trade is to be treated for the purposes of this Part as incurred when the trade is set up and commenced.
4
“Relevant trade” means the trade by reference to which expenditure is qualifying expenditure.
S. 45H(2) modified (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 7
Words in s. 454(1)(c) inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5) , s. 883(1) , Sch. 1 para. 562 (with Sch. 2 )
Words in s. 454(1)(c) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 509 (with Sch. 2 Pts. 1, 2)