Finance Act 2009
|
Intangible assets, etc. |
13.— (1) The Principal Act is amended— | |
(a) in section 247 by inserting the following after subsection (4A): | ||
“(4B) Where a loan, or part of a loan, to an investing company has been applied— | ||
(a) to subscriptions for the share capital of another company on the issue of the share capital by the other company, or | ||
(b) in lending moneys to another company, | ||
and such other company (in this subsection and subsection (4D) referred to as the ‘ other company’) uses those subscriptions or moneys to provide specified intangible assets (within the meaning of section 291A) in respect of which allowances are to be made to it under section 284 as applied by section 291A, then, notwithstanding subsection (3) and section 243, the amount of the relief to be given in respect of so much (in this subsection and subsections (4C) and (4D) referred to as the ‘relevant interest’) of the interest paid in an accounting period by the investing company on the loan, or the part of the loan, as the case may be, as exceeds the sum of— | ||
(i) any dividends or other distributions chargeable to corporation tax received by the investing company from the other company in that accounting period in respect of that share capital, and | ||
(ii) any interest received by the investing company for that accounting period in respect of those moneys lent to the other company, | ||
shall not exceed the amount of interest that would be— | ||
(I) the amount of the relevant interest to be deducted for the corresponding accounting period (within the meaning of subsection (4D)) by the other company— | ||
(A) if that relevant interest had been incurred by the other company in connection with the provision of a specified intangible asset by reference to which allowances were to be made to it under section 284 as applied by section 291A in addition to any other interest so incurred by it, and | ||
(B) notwithstanding subsection (6) of section 291A, if any additional restrictions of deductions, whether for allowances or interest, which would then be required by that subsection, were to be made solely by restriction of the deduction for that relevant interest, | ||
or | ||
(II) where the corresponding accounting period is not the same as the accounting period of the investing company or there is more than one corresponding accounting period, the aggregate of the amounts of relevant interest to be deducted for the corresponding period or periods by the other company if that relevant interest had been incurred by the other company, which amounts are computed by apportionment in accordance with paragraph (d) of subsection (4D) and are interest paid or treated as paid in the accounting period of the investing company. | ||
(4C) The amount (in this paragraph referred to as the ‘excess amount’) of the interest paid in an accounting period by the investing company in respect of which, in accordance with subsection (4B), relief is not given under this section for that accounting period shall not be deducted or otherwise relieved for that period under any other provision of the Tax Acts but that excess amount of interest paid shall be carried forward and treated as an amount of relevant interest paid in the succeeding accounting period to be added to the relevant interest, if any, actually paid in that accounting period, for which, subject to subsection (4B), relief can be given for that accounting period and any excess amount of interest paid or treated as paid in that next succeeding accounting period shall, in turn, be carried forward and treated as an amount of relevant interest paid in the next succeeding accounting period to be added to the relevant interest, if any, actually paid in that accounting period for which, subject to subsection (4B), relief can be given for that accounting period and so on for each succeeding accounting period. | ||
(4D) For the purposes of computing any restriction of relief to be given for an accounting period required by subsection (4B)— | ||
(a) any accounting period (in this subsection referred to as the ‘ corresponding accounting period ’) of the other company which falls wholly or partly within an accounting period of the investing company corresponds to the accounting period of the investing company, | ||
(b) if an accounting period of the investing company and the corresponding accounting period of the other company are not the same relevant interest will be apportioned to corresponding accounting periods on a time basis according to the proportion which the period common to the accounting period of the investing company and the corresponding accounting period bears to the accounting period of the investing company, | ||
(c) the total relevant interest referable to a corresponding accounting period shall be the aggregate of each of the amounts of relevant interest apportioned to that corresponding accounting period under paragraph (b), and | ||
(d) the amount of the total relevant interest referred to in paragraph (c) which, subject to subsection (4B)(I)(A) and (B), would have been deducted if it had been incurred by the other company for the corresponding accounting period shall be apportioned to each of the amounts of relevant interest referred to in paragraph (c) by reference to the proportion which each of those amounts bears to that total relevant interest.”, | ||
(b) in section 288(1)(d) by inserting “a specified intangible asset within the meaning of section 291A,” after “in the case of machinery or plant consisting of”, | ||
(c) in section 288 by inserting the following after subsection (3B): | ||
“(3C) Notwithstanding subsection (3), a balancing charge shall not be made by reference to a wear and tear allowance made to a company in respect of capital expenditure incurred on the provision of a specified intangible asset within the meaning of section 291A where an event referred to in subsection (1) occurs more than 15 years after the beginning of the accounting period of the company in which the asset was first provided and such event, or any scheme or arrangement which includes that event, does not result in a company within the charge to corporation tax which is connected (within the meaning of section 10) with the first-mentioned company incurring capital expenditure on the asset in respect of which expenditure a claim is made under section 291A.”, | ||
(d) by inserting the following after section 291: | ||
“Intangible assets. | ||
291A.— (1) In this section— | ||
‘ authorised officer ’ means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this section; | ||
‘ intangible asset ’ shall be construed in accordance with generally accepted accounting practice; | ||
‘ specified intangible asset ’ means an intangible asset, being— | ||
(a) any patent, registered design, design right or invention, | ||
(b) any trade mark, trade name, trade dress, brand, brand name, domain name, service mark or publishing title, | ||
(c) any copyright or related right within the meaning of the Copyright and Related Rights Act 2000 , | ||
(d) any supplementary protection certificate provided for under Council Regulation (EEC) No. 1768/92 of 18 June 1992 1 , | ||
(e) any supplementary protection certificate provided for under Regulation (EC) No. 1610/96 of the European Parliament and of the Council of 23 July 1996 2 , | ||
(f) any plant breeders’ rights within the meaning of section 4 of the Plant Varieties (Proprietary Rights) Act 1980 , as amended by the Plant Varieties (Proprietary Rights) (Amendment) Act 1998 , | ||
(g) know-how within the meaning of section 768, | ||
(h) any authorisation without which it would not be permissible for— | ||
(i) a medicine, or | ||
(ii) a product of any design, formula, process or invention, | ||
to be sold for any purpose for which it was intended, | ||
(i) any rights derived from research, undertaken prior to any authorisation referred to in paragraph (h), into the effects of— | ||
(i) a medicine, or | ||
(ii) a product of any design, formula, process or invention, | ||
(j) any licence in respect of an intangible asset referred to in any of paragraphs (a) to (i), | ||
(k) any rights granted under the law of any country, territory, state or area, other than the State, or under any international treaty, convention or agreement to which the State is a party, that correspond to or are similar to those within any of paragraphs (a) to (j), or | ||
(l) goodwill to the extent that it is directly attributable to anything within any of paragraphs (a) to (k); | ||
‘ profit and loss account ’, in relation to an accounting period of a company, has the meaning assigned to it by generally accepted accounting practice and includes an income and expenditure account where a company prepares accounts in accordance with international accounting standards. | ||
(2) Where a company carrying on a trade incurs capital expenditure on the provision of a specified intangible asset for the purposes of the trade, then, for the purposes of this Chapter and Chapter 4 of this Part— | ||
(a) the specified intangible asset shall be treated as machinery or plant, | ||
(b) such machinery or plant shall be treated as having been provided for the purposes of the trade, and | ||
(c) for so long as the company is the owner of the specified intangible asset or, where the asset consists of a right, is entitled to that right, that machinery or plant shall be treated as belonging to that company. | ||
(3) Subject to this section, where for any accounting period a wear and tear allowance is to be made under section 284 to a company which has incurred capital expenditure on the provision of a specified intangible asset for the purposes of a trade carried on by that company, subsection (2) of section 284 shall apply as if the reference in paragraph (ad) of that subsection to a rate per cent of 12.5 were a reference to a rate per cent determined by the formula— | ||
A | ||
B × 100 | ||
where— | ||
A is— | ||
(a) the amount, computed in accordance with generally accepted accounting practice, charged to the profit and loss account of the company, for the period of account which is the same as the accounting period, in respect of the amortisation or depreciation of the specified intangible asset, or | ||
(b) where the period of account beginning in the accounting period is not the same as that accounting period, so much of the amount, so computed and charged in that respect to the profit and loss account of the company for any such period of account, as may be apportioned to the accounting period on a just and reasonable basis taking account of the respective lengths of the periods concerned and the duration of use and ownership of the asset in each of those periods, | ||
and | ||
B is the actual cost, within the meaning of paragraph (ad) of section 284(2), of the specified intangible asset or, if greater than the actual cost, the value of that asset by reference to which amortisation or depreciation have been computed for the period of account referred to in paragraph (a) or (b). | ||
(4) (a) Notwithstanding subsection (3), where a company makes an election under this subsection in respect of capital expenditure incurred on the provision of a specified intangible asset for the purposes of a trade carried on by the company, subsection (2) of section 284 shall apply as if the reference in paragraph (ad) of that subsection to 12.5 per cent were a reference to 7 per cent. | ||
(b) An election by a company under paragraph (a) shall— | ||
(i) be made in the return required to be made under section 951 for the accounting period of the company in which the expenditure on the provision of the specified intangible asset is first incurred, and | ||
(ii) apply to all capital expenditure incurred on the asset. | ||
(5) (a) So much of the activities of a company carried on as part of a trade (in this subsection referred to as ‘relevant activities’) which consist of managing, developing or exploiting a specified intangible asset or specified intangible assets in respect of which allowances under this Chapter have been made to the company, including activities which comprise the sale of goods or services that derive the greater part of their value from such assets, shall be treated for the purposes of the Tax Acts, other than any provision of those Acts relating to the commencement or cessation of a trade, as a separate trade (in this subsection and subsection (6) referred to as a ‘relevant trade’), which is distinct from any other trade or part of a trade carried on by the company. | ||
(b) For the purposes of treating relevant activities as a separate trade in accordance with paragraph (a), any necessary apportionment shall be made so that income shall be attributed to the relevant trade on a just and reasonable basis and the amount of that income shall not exceed the amount which would be attributed to a distinct and separate company, engaged in the relevant activities, if it were independent of, and dealing at arm’s length with, the company mentioned in paragraph (a). | ||
(6) (a) Subject to paragraphs (b) and (c), the aggregate amount for an accounting period of— | ||
(i) any allowances to be made to a company under section 284 as applied by this section, and | ||
(ii) any interest incurred in connection with the provision of a specified intangible asset by reference to which allowances referred to in subparagraph (i) are made, | ||
shall not exceed 80 per cent of the amount which would be the amount of the trading income from the relevant trade carried on by the company for that accounting period if no such allowances were to be made to the company and no such interest were to be deducted in computing that income for that accounting period and, for the purposes of this paragraph, the whole or part of any such allowances shall not be allowed for that accounting period and, only if it is then necessary for the purposes of this paragraph, the whole or part of any such interest shall not be deducted for that accounting period. | ||
(b) (i) The amount of any allowances which, by virtue of paragraph (a), remains unallowed for an accounting period (in this subparagraph referred to as the ‘excess amount’) shall be carried forward and treated as an allowance within the meaning of paragraph (a)(i) for the succeeding accounting period to be added to the amount of any allowances within that meaning which, subject to paragraph (a), are available for offset against trading income of the relevant trade for that succeeding accounting period and any excess amount in that succeeding accounting period shall, in turn, be carried forward and treated as an allowance within the meaning of paragraph (a)(i) for the next succeeding accounting period to be added to the amount of any allowances within that meaning which, subject to paragraph (a), are available for offset against trading income of the relevant trade for that accounting period and so on for each succeeding accounting period. | ||
(ii) The amount of any interest for which relief cannot be given, by virtue of paragraph (a), for an accounting period (in this subparagraph referred to as ‘excess interest’) shall be carried forward and treated as interest within the meaning of paragraph (a)(ii) for the succeeding accounting period to be added to the amount of any interest within that meaning for which relief, subject to paragraph (a), can be given for that succeeding accounting period and any excess interest in that succeeding accounting period shall, in turn, be carried forward and treated as interest within the meaning of paragraph (a)(ii) for the next succeeding accounting period to be added to the amount of any interest within that meaning, for which relief, subject to paragraph (a), can be given for that accounting period and so on for each succeeding accounting period. | ||
(c) In computing, for the purposes of this subsection, the trading income from a relevant trade for an accounting period of a company, no account shall be taken of any income which is disregarded for the purposes of the Tax Acts. | ||
(7) This section shall not apply to capital expenditure incurred by a company— | ||
(a) for which any relief or deduction under the Tax Acts may be given or allowed other than by virtue of this section, | ||
(b) to the extent that the expenditure incurred on the provision of a specified intangible asset exceeds the amount which would have been paid or payable for the asset in a transaction between independent persons acting at arm’s length, or | ||
(c) that is not made wholly and exclusively for bona fide commercial reasons and that was incurred as part of a scheme or arrangement of which the main purpose or one of the main purposes is the avoidance of, or reduction in, liability to tax. | ||
(8) (a) The Revenue Commissioners or an authorised officer may, in relation to an allowance made or to be made to a company under section 284 as applied by this section in respect of capital expenditure incurred on a specified intangible asset— | ||
(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 the specified intangible asset and, where such an asset is acquired from a connected person (within the meaning of section 10), the amount which would have been payable for the asset in a transaction between independent persons acting at arm’s length, and | ||
(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 to the expert any detail in relation to the allowance claimed under this section which they consider necessary for such consultation. | ||
(b) (i) Before disclosing information to any expert under paragraph (a), the Revenue Commissioners or authorised officer shall make known to the company— | ||
(I) the identity of the expert who they intend to consult, and | ||
(II) the information they intend to disclose to the expert. | ||
(ii) Where the company shows to the satisfaction of the Revenue Commissioners or authorised officer (or on appeal to the Appeal Commissioners) that disclosure of such information to that expert could prejudice the company’s trade, then the Revenue Commissioners or authorised officer shall not make such disclosure. | ||
(9) (a) This section shall not apply to the acquisition by a company (in this subsection referred to as ‘the transferee’) of a specified intangible asset where the acquisition is from another company (in this subsection referred to as ‘the transferor’) and, by virtue of section 615(2) or 617(1), the transferee is treated as having acquired the asset for a consideration of such amount as would secure that neither a gain nor a loss would accrue on the transferor’s disposal of the asset to the transferee. | ||
(b) Notwithstanding paragraph (a), where the transferor and transferee make a joint election under section 615(4) or 617(4), the transferee shall be entitled to claim an allowance under section 284 as applied by this section in respect of capital expenditure incurred by it on acquiring the specified intangible asset from the transferor. | ||
(10) Any claim made by reference to this section shall be made within 12 months from the end of the accounting period in which the capital expenditure, giving rise to the claim, is incurred.”, | ||
(e) in section 615 by inserting the following after subsection (3): | ||
“(4) (a) This section shall not apply in relation to the transfer of a specified intangible asset within the meaning of section 291A where the company acquiring the asset and the company from which the asset is acquired jointly so elect by giving notice, not later than 12 months from the end of the accounting period in which the company acquired the asset, to the Collector-General in such manner as the Revenue Commissioners may require. | ||
(b) Where— | ||
(i) an election is made under paragraph (a) in relation to the transfer of a specified intangible asset, and | ||
(ii) that transfer is not a transfer to which section 400(6) applies, | ||
then, for the purposes of computing any chargeable gain, the transfer of that asset shall be treated, as respects— | ||
(I) the disposal by the company from which the asset was acquired, and | ||
(II) the acquisition by the company acquiring the asset, | ||
as having been made for a consideration equal to the market value of the asset on the date of that transfer.”, | ||
(f) in section 617(1) by substituting “subsections (2), (3) and (4)” for “subsections (2) and (3)”, | ||
(g) in section 617 by inserting the following after subsection (3): | ||
“(4) Where a member of a group of companies disposes of a specified intangible asset within the meaning of section 291A to another member of the group, subsection (1) shall not apply to the disposal of that asset where the companies jointly so elect by giving notice, not later than 12 months from the end of the accounting period in which the other member of the group acquired the asset, to the Collector-General in such manner as the Revenue Commissioners may require.”, | ||
(h) in section 755 by inserting the following after subsection (2): | ||
“(3) Subject to subsection (4), this section shall not apply to a company within the charge to corporation tax. | ||
(4) (a) Subject to paragraph (b), where a company elects in writing, this section shall apply to capital expenditure, specified in the election, incurred by it on the purchase of patent rights after 7 May 2009 and before 7 May 2011. | ||
(b) An election under paragraph (a) shall be made in the return required to be made under section 951 for the accounting period of the company in which the expenditure is incurred and shall not be made later than 12 months from the end of the accounting period in which the capital expenditure, giving rise to the claim, is incurred.”, | ||
(i) in section 756 by inserting the following after subsection (6): | ||
“(7) This section shall not apply to patent rights in respect of which an allowance has been made to a company under section 284 as applied by section 291A.”, | ||
and | ||
(j) in section 768 by inserting the following after subsection (6): | ||
“(7) Subject to subsection (8), this section shall not apply to a company within the charge to corporation tax. | ||
(8) (a) Subject to paragraph (b), where a company elects in writing, this section shall apply to expenditure, specified in the election, incurred by it on know-how after 7 May 2009 and before 7 May 2011. | ||
(b) An election under paragraph (a) shall be made in the return required to be made under section 951 for the accounting period of the company in which the expenditure is incurred and shall not be made later than 12 months from the end of the accounting period in which the capital expenditure, giving rise to the claim, is incurred.”. | ||
(2) This section applies to expenditure incurred by a company after 7 May 2009. | ||