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HMRC internal manual

Capital Allowances Manual

Know-how: Receipts: When receipt is capital

This is when a receipt for know-how is capital.

  • Know-how is disposed of as one element of a comprehensive arrangement under which a trader effectively gives up an established business in a particular territory (Evans Medical Supplies Ltd v Moriarty 37TC540; Wolf Electric Tools Ltd v Wilson 45TC326).
  • The receipt is wholly or partly attributable to a covenant against competition (a `keep- out’ covenant) and that covenant is ancillary to the grant of a licence under a patent which is a fixed capital asset of the grantor (Murray v Imperial Chemical Industries Ltd 44TC175). In a case like that there may be Case VI liability under ICTA88/S524 for a company or a charge under ITTOIA/S587 for an individual CA75210.


If know-how is disposed of in the course of a continuing trade the receipt is normally a trading receipt CA72000.