Corporation Tax Act 2009 section 740

Abortive expenditure on realisation

Section 740 provides tax relief for costs incurred in attempting to sell or otherwise dispose of an intangible fixed asset, where the transaction falls through before completion.

• Where a company incurs costs in connection with a planned disposal of an intangible fixed asset, but the transaction does not complete, the resulting loss is known as abortive realisation expenditure
• If such a loss is recognised in the company's accounts, a corresponding tax debit of the same amount must be brought into account for corporation tax purposes
• Without this provision, the expenditure would not qualify for tax relief under any other rules, since the disposal never actually took place
• The amount of the tax debit may need to be adjusted in accordance with the intangible fixed assets rules in Part 8 of CTA 2009, or under the transfer pricing rules in Part 4 of TIOPA 2010 where the transaction is not at arm's length