UT-2023-000116; - [2025] UKUT 00164 (TCC)

The relevant corporation tax legislation was contained in Schedule 29 to Finance Act 2002 (“Schedule 29”) and Part 8 of Corporation Tax Act 2009, and it was agreed between the parties that there was no material difference (FTT [86]) and therefore, for convenience, we shall only refer to Schedule 29.

Paragraph 5 of Schedule 29 provides:

“Company not drawing up correct accounts

(1)

If a company does not draw up accounts in accordance with generally accepted accounting practice (“correct accounts”)—

(a)

the provisions of this Schedule apply as if correct accounts had been drawn up, and

(b)

the amounts referred to in this Schedule as being recognised for accounting purposes are those that would have been recognised if correct accounts had been drawn up.

(2)

If a company draws up accounts that rely to any extent on amounts derived from an earlier period of account for which the company did not draw up correct accounts, the amounts referred to in this Schedule as being recognised for accounting purposes in the later period are those that would have been recognised if correct accounts had been drawn up for the earlier period.

(3)

The provisions of this paragraph apply where the company does not draw up accounts at all as well as where it draws up accounts that are not correct. …”

Paragraph 105 of Schedule 29 provides:

“Assets acquired or realised together

(1)

Any reference in this Schedule to the acquisition or realisation of an asset includes the acquisition or realisation of that asset together with other assets.

(2)

For the purposes of this Schedule assets acquired or realised as a result of one bargain are treated as acquired or realised together even though —

(a)

separate prices are, or purport to be, agreed for separate assets, or (b) there are, or purport to be, separate acquisitions or realisations of separate assets.

(3)

Where assets are acquired together —

(a)

any values allocated to particular assets by the company in accordance with generally accepted accounting practice shall be accepted for the purposes of this Schedule;

(b)

if no such values are allocated by the company, so much of the expenditure as on a just and reasonable apportionment is properly attributable to each asset shall be treated for the purposes of this Schedule as referable to that asset.”