CIRD12530 - Core computational rules: deductible debits: general matters and adjustments for tax purposes: expenditure charged to the profit and loss account as it accrues
FA02/SCH29/PARA8
General rule
Subject to the exception for previously capitalised expenditure
described below, paragraph 8 of Schedule 29 provides that
expenditure on an intangible asset gives rise to a deductible debit
for the period of account in which it is written off to a
company’s profit and loss account (see
CIRD12220).
A deduction is therefore due for any expenditure treated in
this way for accounting purposes, which falls within the (wide)
definition described in
CIRD12250. Examples include
expenditure:
- on maintaining or preserving an asset,
- on defending title to it,
- by way of royalties for its use or,
- for the purpose of acquiring or creating an asset which in the event proves abortive.
Priority of other provisions
But sums written off to the profit and loss account, which represent previously capitalised expenditure, should be excluded from paragraph 8 and relieved instead:
- under the rules in Part 4 of Schedule 29 if the sums are written off on the realisation of the asset (see CIRD13210 onwards), or otherwise,
- under FA02/SCH29/PARA9 (see CIRD12700).
Sums written off on the realisation of intangible assets, which have never appeared on a formal balance sheet simply because the assets turn out to have been sold shortly after acquisition, should be dealt with under Part 4.
Tax adjustments
Sums that would otherwise give rise to deductible debits under paragraph 8 are ‘subject to any adjustment required for tax purposes’. See:
- CIRD12030 for the meaning of this expression generally,
- CIRD12580 onwards for the adjustments likely to be in point.
