CIRD11670 - Intangible assets within FA02/SCH29: time test: general conditions: time when asset created or acquired: scope of rules

FA02/SCH29/PARA120 - 125

These rules only apply for the purpose of determining to what extent an asset is created or acquired on or after 1 April 2002 for the purpose of the time test.

They are designed to achieve as smooth a transition as possible from the timing rules for CG and capital allowances to the provisions of Schedule 29, which normally follow the timing of transactions for accounting purposes.

Expenditure incurred rule

Subject to exceptions concerned with the creation of assets, an asset is created or acquired when expenditure on its creation ( CIRD11675) or acquisition ( CIRD11690) is ‘incurred’. The date when such expenditure is incurred is linked to the provisions determining when expenditure is incurred under the corporation tax rules which otherwise apply to the asset.

Apportionment

Under these rules expenditure on the creation or acquisition of an intangible fixed asset may be incurred over a period that straddles 1 April 2002. Where in those circumstances the timing of expenditure determines when an asset is created or acquired two separate assets are regarded as created or acquired, one to which Schedule 29 applies and one to which they do not. Any apportionment of the expenditure between the two assets should be made on a just and reasonable basis.

This provision is to be adopted not only for the purpose of applying Schedule 29 to the asset represented by expenditure incurred on or after 1 April 2002 but also in the application of whatever other corporation tax rules are in point to the second asset.