There is general guidance as to the meaning of know-how at
CA70010. This manual does not seek to duplicate the guidance given
there.
For companies holding intangible assets, such as know-how,
which they created or acquired from an unrelated party after 31
March 2002, the guidance in the CA manual is no longer current and
instead you should consult the CIRD manual for details of the
taxation treatment of expenditure and receipts relating to these
assets. (For more information about the new CT regime for
intangible assets see
BIM35500 onwards). The guidance in the
CA manual is still current for assets held by individuals and
partnerships and for assets acquired by companies before 1 April
2002.
If the intangible asset regime does not apply, acquisition of
know-how is generally dealt with as part of the capital allowance
system. For guidance on payments to acquire manufacturing
techniques, technical knowledge or secret processes (commonly
described as ’know-how') or lock out' payments (for example
where a payment is made in consideration of a clause to provide
protection against competition from the seller or from other
licensees) see CA70010 - CA71400.
If there is a question as to whether the payments for
know-how have a revenue character, this will need to be judged on
its particular facts, in line with the principles explained at
BIM35100 onwards. You may also need to
distinguish between payments for know how, and franchise fees.
Franchising is covered at
BIM57600 onwards.
The guidance on receipts from know how can be found at
CA72000 onwards.
