Introduction New section 849C CTA 2009
18.New Section 849C provides for the calculation of the debit arising under Chapters 3 and 4 of Part 8 CTA 2009 to be apportioned where the relevant asset includes previous third party acquisition costs in relation to relevant assets subsequently acquired by the company.
19.Subsection (2) provides for the debit that would otherwise be taken into account under Chapter 3 (D) to be restricted by reference to the appropriate multiplier (AM). The starting point for the calculation is to calculate D, including the relevant asset’s previous tax written-down value, before applying the restriction. This is to ensure that for periods after the year the expenditure was capitalised, D is calculated using a notional tax written-down value which excludes previous restrictions.
20.Subsection (3) provides for the debit that would otherwise be taken into account on realisation of the asset under Chapter 4 of Part 8 CTA 2009 to be apportioned between trading and non-trading debits.
21.Subsection (4) provides for the calculation of the trading debit; which is the debit that would otherwise be taken into account multiplied by the appropriate multiplier (D x AM). The calculation of the relevant asset’s tax written-down value is as described in paragraph 19.
22.Subsection (5) provides for the calculation of the non-trading debit; which is the difference between the debits that would otherwise be taken into account (D) less the trading debit (TD). The starting point for the calculation of the relevant asset’s tax written-down value is different to that described in paragraphs 19 and 21. Instead, the tax written-down value of the relevant asset is the actual tax written-down value i.e. calculated by reference to the actual debits previously taken into account. This is to ensure that the calculation of the non-trading debit includes debits not previously taken into account.
23.Subsection (6) provides for the calculation of the appropriate multiplier (AM) for the purpose of subsections (2) and (4) and ensures that the company cannot claim relief for debits under Chapters 3, or in relation to trading debits under Chapter 4, in an amount higher than the notional accounting value of the relevant asset acquired from the transferor.
24.Subsections (7) to (9) provides that RAVTPA is the notional accounting value of the relevant asset or previously acquired goodwill at the time of acquisition by the company.
25.Subsection (9) provides for the notional accounting value to be determined as if transferor had retained the asset and continued the business. This limits C’s debits to the amounts that the transferor would have been entitled to claim if they were entitled to relief under Part 8 CTA 2009.