Part 8Intangible fixed assets
Chapter 15Adjustments on change of accounting policy
Change of policy involving change of value
872Adjustments in respect of change
(1)This section and section 873 apply if—
(a)as a result of the change of accounting policy there is a difference (“the accounting difference”) between—
(i)the accounting value of an intangible fixed asset of the company at the end of the earlier period, and
(ii)the accounting value of that asset at the beginning of the later period, and
(b)no election has been made in respect of the asset under section 730 (writing down at fixed rate: election for fixed-rate basis).
(2)If there is an increase in that value, a corresponding credit must be brought into account for tax purposes in the later period.
(3)If there is a decrease in that value, a corresponding debit must be brought into account for tax purposes in the later period.
(4)The amount of the credit or debit is—
where—
D is the accounting difference,
WDVE is the tax written-down value of the asset at the end of the earlier period, and
AVE is the accounting value of the asset at the end of the earlier period.
(5)But if subsection (2) applies, the credit must not exceed—
(a)the sum of debits brought into account for tax purposes in respect of the asset before the later period, less
(b)the sum of the credits so brought into account.
(6)This section is subject to section 878 (exclusion of credits or debits brought into account under other provisions).