CIRD11690 - Intangible assets within CTA09/PART8: FA02 rule: general conditions: time when asset created or acquired: expenditure incurred rule

CTA09/PART8/S887 - 889

The time when expenditure on the acquisition of an asset is incurred depends largely on when the expenditure would be regarded as incurred under the corporation tax rules that would have applied before 1 April 2002 (in the absence of Part 8).

S887 - general rule

In cases where the asset does not fall within CIRD11680 and CIRD11685 (internally generated goodwill and other assets built up out of revenue expenditure), the general rule is that expenditure on the acquisition of an asset is treated as incurred when it is recognised for accountancy purposes. This general rule is subject to S888 and S889.

S888 - cases where chargeable gains rule applies

The expenditure is regarded as incurred when the asset would have been acquired for CG purposes, i.e. before 1 April 2002 (see in particular TCGA92/S28 and CG14250 onwards) where all of the following conditions apply:

• expenditure on the acquisition of an asset would not have qualified for any tax relief against income under the law as it was before 1 April 2002
• that expenditure would be treated as incurred on or after 1 April 2002 under the general rule in s887
• the disposal giving rise to the acquisition would have been treated as occurring before 1 April 2002 for the purposes of TCGA 1992

Note that S888 has a limited application, concerning acquisitions for which the recognition of expenditure under different regimes (chargeable gains and accountancy rules) straddles 1 April 2002 in the manner outlined.

S889 - cases where capital allowances general rule applies

If the expenditure would have qualified for capital allowances it is regarded as incurred when an unconditional obligation to pay it arises. This is the basic rule for capital allowances - see CAA01/S5 and CA11800.