BIM70037 - Cash basis: expenses: capital expenditure: Intangible Assets
S33A(4)(e) ITTOIA 2005
In calculating the profits of a trade under the cash basis, a deduction is disallowed for a non-qualifying intangible asset.
Intangible assets include
- any internally-generated intangible asset, and
- intellectual property,
Intellectual Property means
- any patent, trade mark, registered design, copyright or design, plant breeders’ rights or rights under section 7 of the Plant Varieties Act 1997
- any right under the law of a country or territory outside the UK corresponding or similar to a right within a above
- any information or technique not protected by a right within a & b above but having industrial, commercial or other economic value
- any licence or other right in respect of anything within a, b or c above
Non Qualifying Intangible Assets
Fixed Maximum duration
An intangible asset is non-qualifying unless it has a fixed maximum duration and will cease to exist within 20 years of the date the capital expenditure was incurred.
Where option or rights are granted over an intangible asset and
- intangible asset (asset A) is the right or option to acquire another intangible asset (asset B) and
- asset B does not have a fixed maximum duration (and is therefore a non- qualifying asset)
Asset A is a non-qualifying asset even if when it was exercised, it would cease to exist within 20 years of the grant or right of the option.
Licences
Where
- the trader has an intangible asset and
- the trader grants a licence or any other right in respect of that asset to another person and
- the trader re-acquires any part of the licence or rights in respect of that asset by way of a sub-licence
The intangible asset created by the sub-licence in 3. above is not a qualifying asset.