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HMRC internal manual

Corporate Intangibles Research and Development Manual

HM Revenue & Customs
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Intangible assets within CTA09/PART8: FA02 rule: time when asset treated as created or acquired: scope

CTA09/PART8/S883 - 886

These rules only apply for the purpose of determining if and when an asset is treated as ‘created or acquired’ on or after 1 April 2002 for the purpose of S882(2) - the FA02 rule (see CIRD11505+).


S883 treats an asset as created on or after 1 April 2002 when expenditure on its creation or acquisition is incurred on or after that date (CIRD11670).

This rule is subject to the three other statutory provisions identified in S883(2). These provisions (S884 - 886) are further rules that determine whether the specified assets fall to be treated as created before, or on or after 1 April 2002 (see CIRD11675).

S884 - 886 post-FA09/S70

S884 (goodwill: time of creation) - (see CIRD11680) - and S886 (assets representing production expenditure on films: time of creation) have relatively narrow and specific application. Following FA09/S70 (CIRD48290) S885 now sets out a general rule for determining the relative time of creation of intangible assets that do not come within S883’s expenditure-based test.

S885 (assets representing non-qualifying expenditure: time of creation) applies to assets that, under the law as it was before 1 April 2002, do not represent qualifying expenditure for the purposes of any allowance under CAA2001 (CIRD11685). Such an asset is treated for the purposes of S882 as created before 1 April 2002 if it was held at any time before that date. In all other cases the asset is treated as created on or after 1 April 2002. The test in S885 is therefore one of existence rather than expenditure. See the example in CIRD11688.

S883 and S885 pre-FA09/S70

For accounting periods or parts of accounting periods ending prior to 22 April 2009, S883 set out the general rule. As now S883 determined whether an asset falls to be treated as created or acquired on or after 1 April 2002 by reference to when expenditure was incurred on the creation or acquisition of the asset. Again as now, the S883 rule was subject to the provisions in S884 - 886; however prior to FA09/S70 S885 was more narrow in scope and applied only to internally generated assets.  

Before FA09/S70 the expenditure-based test in S883 could therefore be considered the test generally applicable. From 22 April 2009 it is the existence-based test in S885 that will apply to determine the relative time of creation in most cases. Following FA09/S70 S883 will only apply to determine the relative time of creation where the asset would have qualified for capital allowances under the rules that existed prior to 1 April 2002.


Note that S885 only deals with the relative time of creation. It has no application to acquisitions. FA09/S70 does not alter the general rule in S883 that determines whether an asset has been acquired on or after 1 April 2002 by reference to expenditure on acquisition.