Corporation Tax Act 2009 section 721

Receipts recognised as they accrue

Section 721 requires that when a company recognises a gain from receipts relating to an intangible fixed asset in its accounts, a matching tax credit must be brought into account for corporation tax purposes.

• When a gain from an intangible fixed asset receipt is recognised in a company's profit or loss for a period of account, a corresponding tax credit must also be recognised
• The tax credit equals the gain recognised in the company's accounts — the tax treatment follows the accounting treatment
• This section covers all types of receipts from exploiting intangible fixed assets, including most ordinary royalties, but not gains from disposing of (realising) such assets
• The amount of the tax credit may be adjusted under other provisions in the same Part of the Act or under transfer pricing rules in Part 4 of TIOPA 2010 where transactions are not at arm's length