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HMRC internal manual

Business Income Manual

Capital/revenue divide: intangible assets: acquisition of business franchises or licences

Expenditure on material commercial rights which are well defined in law is likely to be capital if the rights endure for, as a rough rule of thumb, two years or more. Common examples of capital expenditure of this type are expenditure on the acquisition of a business franchise (see BIM57600 onwards) or on a licence needed before a trade can begin.

See, however, BIM35501 for the Corporation Tax intangible fixed assets legislation, which may require the accounting entries in respect of franchises and licences to be followed in computations of income for Corporation Tax, even if those entries are of a capital nature.