Corporation Tax Act 2009 section 885

Assets representing non-qualifying expenditure: time of creation

Section 885 provides a special rule for determining when an internally-generated asset that does not qualify for capital allowances is treated as having been created, for the purposes of Part 8 of the Act (intangible fixed assets).

• Where expenditure on an asset did not qualify for capital allowances under the law before 1 April 2002, the asset is classed as representing "non-qualifying expenditure" and is subject to special timing rules.
• If only part of the expenditure on an asset is non-qualifying, the asset is split into two notional separate assets — one representing the non-qualifying expenditure and one representing the remainder — and each is dealt with independently.
• An asset representing non-qualifying expenditure is treated as created before 1 April 2002 if the company or a related party held the asset at any time before that date; otherwise it is treated as created on or after 1 April 2002.
• Any apportionment needed to split expenditure between non-qualifying and other amounts must be carried out on a just and reasonable basis.