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Amendment of section 768 (allowance for know-how) of Principal Act.
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40.— (1) Section 768 of the Principal Act is amended—
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(a) by substituting the following for subsection (3):
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“(3) Where—
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(a) a person acquires a trade or part of a trade and, together with the trade or the part of the trade, know-how used in the trade or part of the trade, or
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(b) (i) a person acquires a trade or part of a trade, and
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(ii) a person connected (within the meaning of section 10) with the person acquires know-how used in the trade or the part of the trade,
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then no amount shall be allowed to be deducted under this section in respect of expenditure incurred on the acquisition of the know-how.
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(3A) The amount which shall be allowed to be deducted under this section in respect of expenditure incurred by a person on know-how shall be limited to the amount which has been incurred wholly and exclusively on the acquisition of know-how for bona fide commercial reasons and was not incurred as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.”,
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and
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(b) by inserting the following after subsection (4):
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“(5) (a) The Revenue Commissioners may, in relation to a claim by a person that expenditure is allowed to be deducted in accordance with subsection (2)—
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(i) consult with any person (in this subsection referred to as an ‘expert’) who in their opinion may be of assistance in ascertaining the extent to which such expenditure is incurred on know-how, and
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(ii) notwithstanding any obligation as to secrecy or other restriction on the disclosure of information imposed by, or under, the Tax Acts or any other statute or otherwise, but subject to paragraph (b), disclose any detail in the person’s claim under this section which they consider necessary for such consultation.
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(b) (i) Before disclosing information to any expert under paragraph (a), the Revenue Commissioners shall make known to the person—
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(I) the identity of the expert who they intend to consult, and
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(II) the information they intend to disclose to the expert.
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(ii) Where the person shows to the satisfaction of the Revenue Commissioners (or on appeal to the Appeal Commissioners) that disclosure of such information to that expert could prejudice the person’s trade, then the Revenue Commissioners shall not make such disclosure.”.
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(2) This section applies as respects any chargeable period (within the meaning of section 321(2) of the Principal Act) ending on or after 31 January 2008.
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