Corporation Tax Act 2009 section 879K

Restrictions on debits: acquisition from individual or firm

Section 879K restricts the tax debits a company can claim on intangible assets acquired on or after 1 April 2019 from a related individual or from a firm that includes a related individual, unless the asset was originally obtained from an independent third party.

• Where a company acquires a relevant intangible asset from a related individual, or from a firm containing a related individual member, the company cannot claim amortisation or accounting policy change debits for tax purposes.
• The restriction applies to acquisitions on or after 1 April 2019, whether the asset is obtained directly or indirectly from the individual or firm.
• The restriction does not apply if the transferor originally acquired the asset (or, in the case of goodwill, the relevant business including goodwill) from an unrelated third party, and the company acquires the whole of the relevant business.
• If the restriction applies and the company later realises (disposes of) the asset, any resulting debit is treated as a non-trading debit, meaning it cannot be set against trading profits.