(1) This Part—
(a) applies to royalties recognised for accounting purposes on or after 1 April 2002, and
(b) does not apply to royalties recognised for accounting purposes before that date.
(2) But subsection (1) is subject to subsection (3).
(3) This section does not authorise or require an amount to be brought into account in connection with the realisation of a pre-FA 2002 asset.
(4) In this section “realisation” has the same meaning as in Chapter 4 (see section 734).
897 Application to pre-FA 2002 assets consisting of telecommunication rights
(1) This Part applies to a pre-FA 2002 asset consisting of a licence or other right within Chapter 10 of Part 2 of ITTOIA (certain telecommunication rights) (see section 146 of that Act).
(2) This Part applies in relation to such assets as if amounts brought into account for tax purposes under Schedule 23 to FA 2000 in accounting periods ending before 1 April 2002 had been so brought into account under this Part.
(3) This subsection applies if the asset—
(a) was acquired before the beginning of the first accounting period ending on or after 1 April 2002, and
(b) was a chargeable intangible asset immediately after the beginning of that period.
(4) If subsection (3) applies, the asset is treated for the purposes of Chapter 7 (roll-over relief on realisation and reinvestment) as if it had been a chargeable intangible asset at all material times between its acquisition and the beginning of the first accounting period ending on or after 1 April 2002.
898 Relief where assets disposed of on or after 1 April 2002
(1) This section applies if a company disposes of a pre-FA 2002 asset on or after 1 April 2002.
(2) Chapter 7 (roll-over relief in case of realisation and reinvestment) applies as if—
(a) references to the realisation of the old asset were references to its disposal,
(b) references to its being a chargeable intangible asset were references to its being a chargeable asset within TCGA 1992 (see section 900),
(c) references to the proceeds of its realisation were references to the net proceeds of disposal under that Act (see subsection (3)), and
(d) references to its cost recognised for tax purposes were references to the cost under that Act (see subsection (4)).
(3) For the purposes of subsection (2)(c) the net proceeds of disposal under TCGA 1992 are taken to be the amount or value of the consideration for the disposal, less any incidental costs of making the disposal that would be allowable as a deduction under section 38(1)(c) of that Act.
(4) For the purposes of subsection (2)(d) the cost under TCGA 1992 is taken to be an amount equal to the difference between—
(a) the net proceeds of disposal (as defined in subsection (3)), and
(b) the amount of the chargeable gain on the disposal.
(5) Section 850 (part realisation involving related party acquisition: exclusion of roll-over relief) does not apply in a case where Chapter 7 applies because of this section.
(6) References in this section to the disposal of an asset have the same meaning as in TCGA 1992.
899 Relief where degrouping charge on asset arises on or after 1 April 2002
(1) This section applies if—
(a) a company is treated under section 179(3) or (6) of TCGA 1992 (degrouping charge) as having sold and reacquired a pre-FA 2002 asset, and
(b) under section 179(4) or (8) of that Act the gain is treated as accruing on or after 1 April 2002.
(2) Chapter 7 (roll-over relief in case of realisation and reinvestment) applies as specified in section 898(2) and with the additional modifications specified in subsections (3) to (5).
(3) In section 755 (conditions relating to the old asset and its realisation), for the references to the old asset being a chargeable intangible asset throughout the period during which it was held by the company substitute references to its being a chargeable asset within TCGA 1992 throughout the period during which it was held by the company referred to in section 179 of that Act as “company B”.
(4) In section 756(1) (conditions relating to expenditure on other assets), for the references to the date of realisation of the old asset substitute references—
(a) in a case within section 179(3) of TCGA 1992, to the time at which the gain is treated as accruing under section 179(4) of that Act, and
(b) in a case within subsection 179(6) of that Act, to the time at which the gain is treated as accruing under section 179(8) of that Act.
(5) For references to the proceeds of realisation substitute references to the amount of the consideration for which the company is treated under TCGA 1992 as having sold and reacquired the asset.
(6) For the meaning of “chargeable asset within TCGA 1992”, see section 900.
(7) Section 850 (part realisation involving related party: exclusion of roll-over relief) does not apply in a case where Chapter 7 applies because of this section.
900 Meaning of “chargeable asset within TCGA” in sections 898 and 899
(1) For the purposes of sections 898 and 899 an asset is a chargeable asset within TCGA 1992 in relation to a company at any time if—
(a) any gain accruing to the company on the disposal of it at that time would be a chargeable gain within the meaning of that Act,
(b) condition A or condition B is met in relation to the company, and
(c) double tax relief is not available to the company at that time.
(2) Condition A is that at that time the company is UK resident ....
(3) Condition B is that the gain would form part of the company's chargeable profits for corporation tax purposes as a result of section 10B of TCGA 1992 (non-resident company with United Kingdom permanent establishment).
(4) For the purposes of subsection (1) double tax relief is available to the company if it would be treated for the purposes of any double taxation relief arrangements as not liable in the United Kingdom to tax on any gain accruing to it on a disposal of the asset.
(5) References in this section to the disposal of an asset have the same meaning as in TCGA 1992.
(1) This Chapter contains special rules affecting the debits to be brought into account by a company for tax purposes in respect of an intangible fixed asset that is a restricted asset.
(2) Sections 900B to 900D make provision determining when an intangible fixed asset of a company is a restricted asset for the purposes of this Chapter.
(3) Sections 900E and 900F contain the special rules.
(4) The following sections contain supplementary provisions—
(a) section 900G (meaning of relieving acquisition),
(b) section 900H (when two persons are related), and
(c) section 900I (acquisition of asset in pursuance of an unconditional obligation).
900B When an intangible fixed asset is a restricted asset: the first case
(1) An intangible fixed asset of a company is a restricted asset if—
(a) the company acquired the asset on or after 1 July 2020,
(b) the company acquired the asset from a person who at the time of the acquisition was a related party in relation to the company, and
(c) the asset is within subsection (2) or (3).
(2) The asset is within this subsection if—
(a) the asset was a pre-FA 2002 asset in the hands of any company on 1 July 2020, and
(b) at no time on or after 1 July 2020 has the asset been the subject of a relieving acquisition.
(3) The asset is within this subsection if—
(a) the asset was created before 1 April 2002,
(b) immediately before 1 July 2020 the asset was held by a person other than a company, and
(c) at no time on or after 1 July 2020 has the asset been the subject of a relieving acquisition.
(4) But the asset is not within subsection (3) if the person mentioned in that subsection (“the intermediary”) acquired the asset on or after 1 April 2002 from a person (“the third party”) who meets the conditions in subsections (5), (6) and (7).
(5) The third party meets the condition in this subsection if—
(a) the third party is not a company, or
(b) the third party is a company in relation to which the intermediary is not a related party at the time of the intermediary's acquisition.
(6) The third party meets the condition in this subsection if at the time of the intermediary's acquisition the third party is not a related party in relation to a company in relation to which the intermediary is a related party.
(7) The third party meets the condition in this subsection if at the time of the acquisition of the asset by the company mentioned in subsection (1) the third party is not a related party in relation to that company.
900C When an intangible fixed asset is a restricted asset: the second case
(1) An intangible fixed asset of a company (“the asset concerned”) is a restricted asset if—
(a) the company acquired the asset concerned on or after 1 July 2020,
(b) the company acquired the asset concerned from a person who at the time of the acquisition was a related party in relation to the company, and
(c) the asset concerned is within subsection (2).
(2) The asset concerned is within this subsection if—
(a) the asset concerned was created on or after 1 July 2020,
(b) at no time has the asset concerned been the subject of a relieving acquisition,
(c) the value of the asset concerned derives in whole or in part from another asset (“the other asset”), and
(d) the other asset was a pre-FA 2002 asset or a restricted asset in the hands of any company on the date the asset concerned was created.
(3) The condition in subsection (2)(d) is to be treated as met if—
(a) the other asset was held by a person other than a company on the date the asset concerned was created,
(b) on the date the asset concerned was created that person was a related party in relation to a company, and
(c) the other asset would have been a pre-FA 2002 asset or a restricted asset in the hands of that company on the date the asset concerned was created had that company acquired the other asset from that person immediately before that date.
(4) For the purposes of this section the cases in which the value of an asset may be derived from any other asset include any case where—
(a) assets have been merged or divided,
(b) assets have changed their nature, or
(c) rights or interests in or over assets have been created or extinguished.
900D When an intangible fixed asset is a restricted asset: the third case
(1) An intangible fixed asset of a company (“the asset concerned”) is a restricted asset if—
(a) the company acquired the asset concerned on or after 1 July 2020, and
(b) the asset concerned is within subsection (2).
(2) The asset concerned is within this subsection if—
(a) the asset concerned was acquired by any company on or after 1 July 2020 directly or indirectly as a consequence of, or otherwise in connection with, the realisation by another person of an asset (“the other asset”),
(b) that company and that other person were related parties at the time of the realisation of the other asset,
(c) the other asset was a pre-FA 2002 asset or a restricted asset in the hands of any company at any time during the period beginning with 1 July 2020 and ending with the time of the realisation mentioned in paragraph (a),
(d) the other asset was not the subject of a relieving acquisition at any time during the period beginning with 1 July 2020 and ending with the time of the realisation mentioned in paragraph (a), and
(e) the asset concerned has not been the subject of a relieving acquisition at any time after the realisation mentioned in paragraph (a).
(3) The condition in subsection (2)(c) is to be treated as met if—
(a) immediately before 1 July 2020 the other asset was held by a person that was not a company,
(b) immediately before 1 July 2020 that person was a related party in relation to a company, and
(c) the other asset would have been a pre-FA 2002 asset in the hands of that company on 1 July 2020 had that company acquired the asset from that person immediately before that date.
(4) For the purposes of subsection (2) it does not matter whether—
(a) the other asset is the same as the asset concerned,
(b) the asset concerned is acquired at the time of the realisation of the other asset, or
(c) the asset concerned is acquired by merging assets or otherwise.
(1) This section applies in respect of a restricted asset of a company if it is a restricted asset by reason of section 900B.
(2) If the company was the first company to acquire the asset on or after 1 July 2020, the relevant Chapters of this Part have effect as if the company acquired the asset at no cost.
(3) If the company was not the first company to acquire the asset on or after 1 July 2020, the relevant Chapters of this Part have effect as if the company acquired the asset for the adjusted amount.
(4) The adjusted amount is—
A − B
where—
A is the amount of consideration—
for which the company actually acquired the asset, or
if different, for which it would (ignoring this section) be treated for the purposes of the Taxes Acts as having acquired the asset, and
B is the market value of the asset on the date it was first acquired by a company on or after 1 July 2020.
(5) Where B is greater than A the adjusted amount is nil.
(6) In this section—
“market value”, in relation to an asset, means the price the asset might reasonably be expected to fetch on a sale in the open market, and
“the relevant Chapters of this Part” means—
Chapter 3 (debits in respect of intangible fixed assets),
Chapter 15 (adjustments on change of accounting policy), and
Chapter 5 (calculation of tax written-down value) in so far as it has effect for the purposes of Chapters 3 and 15.
(1) This section applies in respect of a restricted asset of a company if it is a restricted asset by reason of section 900C or 900D.
(2) The relevant Chapters of this Part have effect as if the company acquired the asset for the adjusted amount.
(3) The adjusted amount is calculated as follows—
Step 1 Find the amount—
for which the company actually acquired the asset, or
if different, for which it would (ignoring this section) be treated for the purposes of the Taxes Acts as having acquired the asset.
Step 2 Deduct from the amount found at Step 1 such proportion of the notional deduction amount for the relevant other asset or each relevant other asset as is just and reasonable in the circumstances.
(4) Where the deduction at Step 2 results in a negative value the adjusted amount is nil.
(5) In subsection (3)—
“relevant other asset” means an asset by reference to which the conditions in paragraphs (c) and (d) of section 900C(2) or (as the case may be) the conditions in section 900D(2) were met, and
“the notional deduction amount”, in relation to a relevant other asset, means—
in a case where section 900E(2) would have applied had the company acquired the relevant other asset instead of the restricted asset, an amount equal to the market value of the relevant other asset at the time the restricted asset was acquired, and
in a case where section 900E(3) would have applied had the company acquired the relevant other asset instead of the restricted asset, an amount equal to the market value of the relevant other asset at the time it was first acquired by a company on or after 1 July 2020, and
in a case where subsection (2) of this section would have applied had the company acquired the relevant other asset instead of the restricted asset, the amount that would have been deducted at step 2 of subsection (3) of this section if the company had acquired the relevant other asset instead of the restricted asset.
(6) In this section “market value” and “the relevant Chapters of this Part” have the same meaning as in section 900E.
For the purposes of this Chapter, an asset is the subject of a relieving acquisition if it is acquired by a company from a person who at the time of the acquisition is not a related party in relation to the company.
900H Supplementary provision about when two persons are related
(1) References in this Chapter to one person being a related party in relation to another person are to be read as including references to the participation condition being met as between those persons.
(2) References in subsection (1) to a person include a firm in a case where, for section 1259 purposes, references in this Chapter to a company are read as references to the firm.
(3) In subsection (2) “section 1259 purposes” means the purposes of determining under section 1259 the amount of profits or losses to be allocated to a partner in a firm.
(4) Section 148 of TIOPA 2010 (when the participation condition is met) applies for the purposes of subsection (1) as it applies for the purposes of section 147(1)(b) of TIOPA 2010.
900I Acquisition of asset in pursuance of an unconditional obligation
(1) A company that acquires an intangible fixed asset in pursuance of an unconditional obligation under a contract is to be treated for the purposes of this Chapter as having acquired the asset on the date on which the company became subject to that obligation or (if later) the date on which that obligation became unconditional.
(2) An obligation is unconditional if it may not be varied or extinguished by the exercise of a right (whether under contract or otherwise).
(1) For the purposes of this Part—
(a) fungible assets of the same kind that are held by the same person in the same capacity are treated as indistinguishable parts of a single asset,
(b) that asset is treated as growing as additional assets of the same kind are created or acquired, and
(c) that asset is treated as diminishing as some of the assets are realised.
(2) In this Part “fungible assets” means assets of a nature to be dealt in without identifying the particular assets involved.
900K Fungible assets: pre-FA 2002 assets and restricted assets
(1) For the purposes of section 900J—
(a) pre-FA 2002 assets,
(b) restricted assets, and
(c) standard intangible fixed assets,
are to be regarded as assets of different kinds.
(2) If section 900J applies (whether or not it is a case where subsection (1) of this section has effect)—
(a) a single asset comprising pre-FA 2002 assets is treated as itself being a pre-FA 2002 asset,
(b) a single asset comprising restricted assets is treated as itself being a restricted asset, and
(c) a single asset comprising standard intangible fixed assets is treated as itself being a standard intangible fixed asset.
900L Realisation of fungible assets: pre-FA 2002 assets and restricted assets
(1) This section applies if—
(a) a company realises a fungible asset, and
(b) apart from subsection (1) of section 900K, the asset would be treated as part of a single asset comprising more than one of the kinds of asset referred to in that subsection.
(2) The realisation is treated—
(a) as diminishing a single asset of the company comprising pre-FA 2002 assets in priority to diminishing a single asset of the company comprising restricted assets or a single asset of the company comprising standard intangible fixed assets, and
(b) as diminishing a single asset of the company comprising restricted assets in priority to diminishing a single asset of the company comprising standard intangible fixed assets.
900M Acquisition of fungible assets: pre-FA 2002 assets and restricted assets
(1) Fungible assets acquired by a company that would not otherwise be treated as pre-FA 2002 assets are so treated so far as they are identified, in accordance with the following rules, with pre-FA 2002 assets realised by the company.
(2) Fungible assets acquired by a company that would not otherwise be treated as pre-FA 2002 assets or restricted assets are to be treated as restricted assets so far as they are identified, in accordance with the following rules, with restricted assets realised by the company.
(3) Rule 1 is that assets acquired are identified with pre-FA 2002 assets or restricted assets of the same kind realised by the company within the period beginning 30 days before and ending 30 days after the date of the acquisition.
(4) The reference in subsection (3) to assets “of the same kind” is to assets that are, or but for section 900K(1) would be, treated as part of a single asset because of section 900J.
(5) Rule 2 is that assets realised earlier are identified before assets realised later.
(6) Rule 3 is that assets acquired earlier are identified before assets acquired later.
900N Debits in respect of a single asset comprising restricted assets
(1) This section applies in respect of a single asset of a company that comprises restricted assets (and is itself treated as a restricted asset by reason of section 900K(2)(b)).
(2) The relevant Chapters of this Part have effect as if the company acquired the single asset for the sum of the amounts for which the company would have been treated for the purposes of those Chapters as having acquired each of the restricted assets that comprises the single asset.
(3) In this section “the relevant Chapter of this Part” has the meaning given by section 900E(6).
In this Chapter—
“restricted asset” has the same meaning as in Chapter 16A, and
“standard intangible fixed asset” means an intangible fixed asset that is neither a pre-FA 2002 asset nor a restricted asset.
901 Effect of application of the I - E basis: non-trading amounts
In the application of the I - E rules in relation to a company's basic life assurance and general annuity business, the provisions of this Part need to be read with section 88 of FA 2012 (which provides for the activities carried on by the company in the course of that business not to constitute the whole or any part of a trade or of a property business).
(1) The general rule in section 882 (this Part not to apply to pre-FA 2002 assets) does not apply if the intangible fixed asset consists of the rights of a member of Lloyd's under a syndicate within the meaning of Chapter 5 of Part 4 of FA 1994 (taxation of corporate members of Lloyd's).
(2) This Part applies in relation to the asset as respects amounts to be brought into account for tax purposes in accounting periods ending on or after 1 April 2002.
(3) For the purposes of section 729(5) (writing down on accounting basis: calculation of amount of debit for tax purposes) as it applies to the first accounting period ending on or after 1 April 2002, the tax written down value of the asset must be calculated under section 742 in accordance with subsection (4).
(4) That value must be calculated as if the debits to be deducted under section 742 included all accounting losses previously recognised in respect of the asset.
(5) It does not matter for the purposes of subsection (4) if those accounting losses previously gave rise to a deduction for tax purposes.
(6) This subsection applies if an asset within subsection (1)—
(a) was acquired before the beginning of the first accounting period ending on or after 1 April 2002, and
(b) is a chargeable intangible asset immediately after the beginning of that period.
(7) If subsection (6) applies, the asset is treated for the purposes of Chapter 7 (roll-over relief on realisation and reinvestment) as if it had been a chargeable intangible asset at all material times between its acquisition and the beginning of the first accounting period ending on or after 1 April 2002.
(8) For the purposes of this section, an asset is treated as acquired at the same time as it would be treated as acquired for the purposes of section 882 (see sections 883 to 885).
906 Priority of this Part for corporation tax purposes
(1) The amounts to be brought into account in accordance with this Part in respect of any matter are the only amounts to be brought into account for corporation tax purposes in respect of that matter.
(2) Subsection (1) is subject to any indication to the contrary.
(3) In particular, see—
(a) section 1308 (expenditure brought into account in determining value of intangible asset), ...
(b) ..., and
(c) section 112(5) of TIOPA 2010 (deduction for foreign tax where no credit available).
(1) This Part applies the charge to corporation tax on income to—
(a) profits from disposals of know-how (see Chapter 2), and
(b) profits from sales of patent rights (see Chapter 3).
(2) This Part also provides for relief from corporation tax on patent income (see Chapter 4).
(3) Chapter 5 contains supplementary provision relevant to Chapters 2 to 4.
(4) This Part needs to be read in the light of Part 8 (intangible fixed assets).
(5) See in particular the following provisions of Part 8, which are relevant to the application of that Part—
(a) section 713 (meaning of “intangible fixed asset”),
(b) Chapter 16 (which limits the application of Part 8 to assets which are not pre-FA 2002 assets within the meaning of section 881), and
(c) section 906 (which contains a rule about the priority of Part 8 for corporation tax purposes).
908 Charge to tax on profits from disposals of know-how
(1) The charge to corporation tax on income applies to profits arising where consideration is received by a company—
(a) for the disposal of know-how, or
(b) for giving, or wholly or partly fulfilling, an undertaking which—
(i) is given in connection with a disposal of know-how, and
(ii) restricts or is designed to restrict any person's activities in any way.
(2) For the purposes of subsection (1)(b), it does not matter whether or not the undertaking is legally enforceable.
(3) Subsection (1) is subject to the exceptions in section 909.
(4) In this Chapter “know-how” means any industrial information or techniques likely to assist in—
(a) manufacturing or processing goods or materials,
(b) working a source of mineral deposits (including searching for, discovering or testing mineral deposits or obtaining access to them), or
(c) carrying out any agricultural, forestry or fishing operations.
(5) In subsection (4)—
(a) “mineral deposits” includes any natural deposits capable of being lifted or extracted from the earth and for this purpose geothermal energy is treated as a natural deposit, and
(b) “source of mineral deposits” includes a mine, an oil well and a source of geothermal energy.
(1) Section 908 does not apply in the following cases.
(2) Case A is if the consideration is brought into account under section 462 of CAA 2001 (disposal values).
(3) Case B is if the consideration is dealt with in relation to the company receiving it as a trading receipt under section 177(2) (disposal of know-how if trade continues to be carried on).
(4) Case C is if the consideration is dealt with in relation to the person receiving it as a capital receipt for goodwill under section 178(2) (disposal of know-how as part of disposal of all or part of a trade).
(5) Case D is if the disposal of the know-how is by way of a sale and—
(a) the buyer is a body of persons over which the seller has control,
(b) the seller is a body of persons over which the buyer has control, or
(c) the buyer and the seller are both bodies of persons and another person has control over both of them.
(6) In subsection (5) “body of persons” includes a firm.
(1) The profits charged under section 908 are—
(a) the amount of the consideration, less
(b) any expenditure incurred by the company wholly and exclusively in the acquisition or disposal of the know-how.
(2) Such expenditure may not be taken into account more than once, whether under this section or otherwise.
(3) This section needs to be read with section 926 (contributions to expenditure).
(1) This Chapter—
(a) applies the charge to corporation tax on income to profits from sales of patent rights (see sections 912 and 913),
(b) contains provision about how the amount chargeable is taxed (see sections 914 to 918), and
(c) contains related provision, including provision relevant to the application of the Chapter (see sections 919 to 923).
(2) Section 848 of ITA 2007, under which a sum representing income tax deducted under section 910 of that Act (deduction from payment to non-UK residents in respect of sale of patent rights) is treated as income tax paid by the recipient, is also relevant to the tax treatment of payments made to non-UK resident companies in respect of sales of patent rights.
912 Charge to tax on profits from sales of patent rights
(1) The charge to corporation tax on income applies to profits from sales by a company of the whole or part of any patent rights.
(2) Subsection (1) applies in the case of a non-UK resident company if the patent is granted under the laws of the United Kingdom.
(3) In this Chapter “patent rights” means the right to do or authorise the doing of anything which, but for the right, would be an infringement of a patent.
(1) A company's profits from the sale of the whole or part of patent rights are—
(a) any capital sum comprised in the proceeds of sale, less
(b) the deductible costs.
(2) The deductible costs are—
(a) the capital cost (if any) of the rights sold, and
(b) any incidental expenses incurred by the company in connection with the sale.
(3) If—
(a) the company acquired the rights sold, or the rights out of which they were granted, by purchase,
(b) the company has previously sold part of the purchased rights, and
(c) the proceeds of that sale, after deducting any incidental expenses, consisted wholly or partly of a capital sum,
the capital cost is reduced by that sum.
(4) References in this Chapter to the capital cost of patent rights are to any capital sum included in any price paid by the company to purchase—
(a) the rights, or
(b) the rights out of which they were granted.
(5) This section needs to be read with sections 924 (relief for expenses: patent income) and 926 (contributions to expenditure).
914 UK resident companies: proceeds of sale not received in instalments
(1) This section applies if a company liable for tax under section 912—
(a) is UK resident, and
(b) does not receive the proceeds of sale in instalments.
(2) The appropriate fraction of the amount chargeable is taxed—
(a) in the accounting period in which the company receives the proceeds of sale (“the period of receipt”), and
(b) in successive accounting periods, until the expiry of the 6-year period beginning at the start of the period of receipt.
(3) The appropriate fraction is the same fraction of the amount chargeable as the accounting period in question is of 6 years (or, in the last period, such smaller fraction of that amount as has not already been taxed).
(4) The company may elect that the whole of the amount chargeable is to be taxed instead in the period of receipt.
(5) An election under subsection (4) must be made within the two-year period beginning at the end of the period of receipt.
915 UK resident companies: proceeds of sale received in instalments
(1) This section applies if a company liable for tax under section 912—
(a) is UK resident, and
(b) receives the proceeds of sale in instalments.
(2) The appropriate fraction of the amount chargeable in respect of each instalment is taxed—
(a) in the accounting period in which the company receives the instalment (“the period of receipt”), and
(b) in successive accounting periods, until the expiry of the 6-year period beginning at the start of the period of receipt.
(3) The appropriate fraction of the amount chargeable in respect of an instalment is the same fraction of that amount as the accounting period in question is of 6 years (or, in the last period, such smaller fraction of the amount as has not already been taxed).
(4) The company may elect that the whole of any instalment is to be taxed instead in the period of receipt.
(5) An election under subsection (4) must be made within the two-year period beginning at the end of the period of receipt.
916 Non-UK resident companies: proceeds of sale not received in instalments
(1) This section applies if a company liable for tax under section 912—
(a) is not UK resident, and
(b) does not receive the proceeds of sale in instalments.
(2) The whole of the amount chargeable is taxed in the accounting period in which the company receives the proceeds (“the period of receipt”).
(3) The company may elect instead that the amount chargeable—
(a) is to be treated as arising rateably in the accounting periods ending 6 years from the start of the period of receipt, and
(b) is taxed accordingly.
(4) An election under subsection (3) must be made within the two-year period beginning at the end of the period of receipt.
(5) The election has effect in relation to accounting periods of the company during which the company is within the charge to corporation tax in respect of any proceeds of the sale not consisting of a capital sum.
(6) Such repayments and assessments are to be made for each of the accounting periods affected as are necessary to give effect to the election.
(7) Subsection (6) is subject to the qualifications in section 920 (adjustments where tax has been deducted).
917 Non-UK resident companies: proceeds of sale received in instalments
(1) This section applies if a company liable for tax under section 912—
(a) is not UK resident, and
(b) receives the proceeds of sale in instalments.
(2) The amount chargeable in respect of each instalment is taxed in the accounting period in which the company receives the instalment (“the period of receipt”).
(3) The company may, for any instalment, elect instead that the amount chargeable in respect of the instalment—
(a) is to be treated as arising rateably in the accounting periods ending 6 years from the start of the period of receipt, and
(b) is taxed accordingly.
(4) An election under subsection (3) must be made within the two-year period beginning at the end of the period of receipt.
(5) The election has effect in relation to accounting periods of the company during which the company is within the charge to corporation tax in respect of any proceeds of the sale not consisting of a capital sum.
(6) Such repayments and assessments are to be made for each of the accounting periods affected as are necessary to give effect to the election.
(7) Subsection (6) is subject to the qualifications in section 920 (adjustments where tax has been deducted).
(1) If a body corporate which is liable for tax under section 912 commences to be wound up, any amounts falling within subsection (2) are taxed in the accounting period in which the winding up commences.
(2) The amounts are—
(a) any amounts which would have been chargeable in later accounting periods under section 914(2) or 915(2) (UK resident companies: spreading of charge to tax), and
(b) any amounts which would have been chargeable in later accounting periods under section 916(3) or 917(3) (non-UK resident companies: election to spread charge to tax).
919 Deduction of tax from payments to non-UK resident companies
(1) This section applies if a non-UK resident company is liable for tax under section 912 on profits from the sale of the whole or part of any patent rights.
(2) The rules in section 913 allowing the capital cost (if any) of the rights sold to be deducted in calculating the profits from the sale do not affect the amount of income tax which is to be deducted under section 910 of ITA 2007.
(3) No election made by the company under section 916(3) or 917(3) (election to spread charge to tax) in relation to the proceeds of sale or any instalment affects the amount of income tax which is to be deducted under section 910 of ITA 2007.
Where any sum has been deducted from a payment under section 910 of ITA 2007, any adjustment necessary—
(a) because of section 919(2), or
(b) because of an election under section 916(3) or 917(3),
must be made by way of repayment of tax.