Corporation Tax Act 2009 section 872

Adjustments in respect of change

Section 872 provides for a tax adjustment when the accounting value of an intangible fixed asset changes as a result of a change of accounting policy.

• Where a change of accounting policy causes a difference in the accounting value of an intangible fixed asset between the end of the earlier period and the start of the later period, a tax credit or debit must be recognised in the later period
• The adjustment is calculated as: accounting difference × (tax written-down value at end of earlier period ÷ accounting value at end of earlier period)
• Any credit is capped at the cumulative net debits (total debits less total credits) previously brought into account for tax purposes in respect of the asset
• This section does not apply where the company has elected for fixed-rate writing down under section 730, and is subject to the exclusion of amounts already recognised under other provisions