CIRD10130 - Intangible assets: introduction: disallowance of sums charged in the accounts

As mentioned in CIRD10110, the fact that FA02/SCH29 in general takes precedence over other corporation tax legislation means that the legislation disallowing expenditure more generally, such as ICTA88/S74, no longer automatically applies. Instead we have to start with the accounting entries and apply the rules of Schedule 29 to them.

But there are good policy reasons why some of the more general rules disallowing expenditure of corporation tax should still apply, even within the approach of Schedule 29. For that reason some rules disallowing or deferring relief for expenditure are attracted or reproduced by Schedule 29. Examples include disallowance of business entertainment, as well as the deferral of relief for delayed payment of remuneration. The specific rules are covered starting at CIRD12500.

There is also a general ‘business or commercial purpose test’ to avoid granting deductions or taxing receipts under Schedule 29 in respect of an intangible asset held by a company for non- business or non-commercial reasons CIRD25070.