Corporation Tax Act 2009 section 879M

When the partial restrictions apply: qualifying IP assets

Section 879M sets out the first scenario in which a partial restriction on tax debits applies to relevant assets (such as goodwill) acquired as part of a business purchase that also includes qualifying intellectual property assets.

• The partial restriction applies where a company acquires a relevant asset on or after 1 April 2019 as part of a business acquisition that also includes qualifying IP assets, and the formula (A × 6) / B produces a result of less than 1
• The formula compares 6 times the expenditure on qualifying IP assets (A) against the total expenditure on the relevant asset and any other relevant assets acquired with the business (B)
• If full restrictions under other provisions already apply to the asset (for example, restrictions relating to pre-Finance Act 2019 assets or acquisitions from individuals or firms), the partial restriction does not apply
• The Treasury has the power to change the multiplier of 6 used in the formula by regulations