CIRD44086 - Intangible assets: Restrictions for goodwill and relevant assets: Partial restriction in relation to qualifying IP assets

CTA09/S879M

As explained at CIRD44080, a full restriction applies where no business or no qualifying IP is acquired. This page explains when to apply a partial restriction when a business with qualifying IP is acquired. Broadly this partial restriction operates when the cost of the relevant assets acquired exceeds 6 times the cost of the qualifying IP.

CTA09/S879M applies where:

• The company acquires relevant assets on or after 1 April 2019,
• They are acquired as part of the acquisition of a business,
• That business acquisition includes qualifying IP assets that are to be used on a continuing basis in the course of the business, and
• The cost of the relevant assets exceeds 6 times the cost of the qualifying IP

CTA09/S879M is not relevant where the full restriction applies because the relevant assets are either

• Pre-FA2019 assets, or
• Acquired from a related individual or firm (subject to the third party acquisition condition).

For more information on the full restriction rules see CIRD44075 and CIRD44083.

Whether the 6 times limit is exceeded is determined by the formula in CTA09/S879M(3). This compares the expenditure on the acquisition of the relevant asset, or assets, with N times the expenditure on the acquisition of qualifying IP.

The multiple N is 6, but this can be varied by future regulations.

The expenditure includes both capitalised and non capitalised costs, subject to any adjustment required by CTA09/PART8 or TIOPA2010/PART4.