Corp Tax - Chapter 10

Question 1

When did the rules for intangible Assets change

Answer 1

1 April 2002

However, when a pre-FA 2002 IFA is acquired from an unrelated company on or after 1 April 2002, it will then be taxed under the IFA rules

Question 2

IFAs - how are debits and credits treated in the accounts.

Answer 2

Debits and Credits are treated as income

Question 3

Intangible Assets examples:

Answer 3

• intellectual property, eg patents, registered trademarks, designs or copyrights;
• goodwill.

Question 4

IFA Credits

Answer 4

• Receipts from royalties
• Revaluation of an IFA
• Profit on realisation of an IFA

Question 5

IFA Debits

Answer 5

• Royalty payments
• Loss on realisation of an IFA
• Amortisation of an IFA

Question 6

Are patents paid net or gross of basic rate tax?

Answer 6

Net

Question 7

Are royalties paid net or gross of basic rate tax?

Answer 7

Gross

Question 8

Amortisation/Impairment in accounts

Answer 8

The company is allowed a deduction for the amortisation or impairment of an IFA
charged in the accounts.

Alternatively, it can claim a straight line deduction of 4% on cost.

These rules are modified where the IFA is goodwill and other customer related intangible assets.

Question 9

Qualifying intellectual property includes:

Answer 9

• patents;
• registered designs; and
• copyright or design rights.

Question 10

Allowable deduction for qualifying property

Answer 10

6.5% of cost per annum (restricted for periods of less than 12m)

There is no provision for the company to alternatively claim a deduction based on
the amount charged in the accounts.

Where no tax relief is available for the amortisation of relevant assets, any debits
(ie losses) arising on the disposal of such assets are treated as non-trading debits,
thus restricting how they can be relieved.

Any credits (ie income gains) arising on
such disposals are not reclassified and are treated as trade profits or non-trading
gains as the case may be.