Part 8

Patent allowances
Chapter 5

Supplementary provisions

Anti-avoidance: limit on qualifying expenditure
481
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 587 of ITTOIA 2005 or section 912 of CTA 2009,
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.
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. 481(5)(b) inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5) , s. 883(1) , Sch. 1 para. 566 (with Sch. 2 )
Words in s. 481(5)(b) 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. 512 (with Sch. 2 Pts. 1, 2)