Tax and Duty Manual Part 09-02-05 – Capital allowances for intangible assets – is updated for changes introduced in Finance Act (FA) 2020 to section 288(3C) TCA 1997, which impacts the intangible assets regime set out under section 291A TCA 1997. FA 2020 provided that intangible assets acquired on or after 14 October 2020 are within the scope of balancing charge rules.

The intangible asset regime as set out under section 291A TCA 1997 allows a company to claim capital allowances on the cost of acquiring intellectual property assets for the purposes of its trade. Section 288 TCA 1997 provides for a balancing adjustment on the disposal or write-off of assets on which capital allowances have been claimed. Prior to FA 2020, intangible assets under section 291A were not subject to a balancing charge where the balancing event occurred more than five years after the beginning of the accounting period of the company in which the asset was first provided. The FA 2020 amendment to section 288 TCA 1997 provides that balancing charges may now arise on intangible assets acquired on or after 14 October 2020 regardless of when a balancing event occurs.

Revenue Tax and Duty Manual Part 09-02-05 –Capital allowances for intangible assets – is updated in the following sections:

• Section 2: Overview of scheme – fourth paragraph
• Section 3.11: Will a balancing charge or balancing allowance apply on the disposal of an intangible asset?
• New section 3.14: Where section 400 applies to a company reconstruction, are allowances available to the successor under section 291A?
• New section 3.15: How does section 291A interact with the transfer pricing rules in Part 35A?

See Revenue eBrief No. 071/21 for full details.