Corporation Tax Act 2009 section 737

Apportionment in case of part realisation

Section 737 explains how to calculate the proportion of an intangible fixed asset's tax written-down value or cost that can be set off against proceeds when only part of the asset is realised, rather than the whole asset.

• When a company partially realises an intangible fixed asset, only a proportionate share of the tax written-down value or original cost may be set against the proceeds
• The proportion is calculated using the formula: (AVB − AVA) / AVB, where AVB is the accounting value immediately before the part realisation and AVA is the accounting value immediately after
• The formula works whether or not the tax written-down value has diverged from the book value shown in the accounts
• This apportionment applies to the calculations under both section 735 (assets written down for tax purposes) and section 736 (assets shown in the balance sheet but not written down for tax purposes)