BIM35515 - Capital/revenue divide - intangible assets: Acquisition of business franchises or licences

Should endure for two years or more

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 BIM57600onwards) or on a licence needed before a trade can begin.

See, however, BIM35501 for legislation, which from 1 April 2002 may require the accounting entries in respect of franchises and licences to be followed in computations of income for CT, even if those entries are of a capital nature.