Part 8

Intangible fixed assets
Chapter 15

Adjustments on change of accounting policy

Change of policy involving disaggregation

Election for fixed-rate writing down in relation to resulting asset
877
1
This section applies if—
a
the change of accounting policy results in an intangible fixed asset of the company that was treated as one asset (“the original undivided asset”) in the earlier period being treated as two or more assets (“the resulting assets”) in the later period, and
b
no election under section 730 (writing down at fixed rate: election for fixed-rate basis) has been or is subsequently made in respect of the original undivided asset.
2
An election under that section may be made in respect of any of the resulting assets.
3
But such an election may be made only within the period during which such an election could have been made in relation to the original undivided asset.
4
The effect of the election is that—
a
the original undivided asset is treated as if it had at all material times consisted of as many assets (“notional original assets”) as there are resulting assets,
b
each notional original asset is taken to be the same asset as one of the resulting assets (its “corresponding resulting asset”),
c
the appropriate proportion of every amount falling to be taken into account in relation to the original undivided asset is attributed to each of the notional original assets, and
d
this Part applies in relation to each of the notional original assets and its corresponding resulting asset accordingly.
5
For the purposes of subsection (4)(c) the appropriate proportion of every amount falling to be taken into account in relation to the original undivided asset that is to be attributed to each notional original asset is found by reference to the notional original asset's corresponding resulting asset.
6
The appropriate proportion in relation to each resulting asset is—
AVL/TAVL
where—
AVL is the accounting value of that resulting asset at the beginning of the later period, and
TAVL is the sum of the accounting values of all the resulting assets at the beginning of that period.
Pt. 8 modified (1.1.2010) by Northern Rock plc (Tax Consequences) Regulations 2009 (S.I. 2009/3227), regs. 1, 6(1)
Pt. 8 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 88(1)(2)(7) (with s. 147, Sch. 17)
Pt. 8 modified (1.10.2011) by Postal Services Act 2011 (c. 5), s. 93(2)(3), Sch. 2 para. 6(1); S.I. 2011/2329, art. 3
Pt. 8 modified (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 601, 1184(1) (with Sch. 2)
Pt. 8 modified (15.11.2011 for specified purposes, 30.3.2012 for E.W.) by Localism Act 2011 (c. 20), ss., 240(5)(o), Sch. 24 para. 1(3); S.I. 2012/628, art. 3(b)
Pt. 8 modified (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 35, 45 (with Sch. 5 para. 36)
Pt. 8 modified (1.4.2012) by Budget Responsibility and National Audit Act 2011 (c. 4), s. 29, Sch. 4 para. 3(1); S.I. 2011/2576, art. 5