Section 879N — Corporation Tax Act 2009: When the partial restrictions apply: acquisition from individual or firm

When the partial restrictions apply: acquisition from individual or firm 879N 1 Section 879O (the partial restrictions on debits) also applies in respect of a relevant asset of a company if—

a the company acquires the asset on or after 1 April 2019 directly or indirectly from an individual or firm (“ the transferor ”),

b the related party condition is met, c the third party acquisition condition is met, and d the amount in subsection (6) is less than 1.

2 But section 879O does not apply in respect of the relevant asset if either of the following sections applies in respect of it—

a section 879C (restrictions on debits: pre-FA 2019 relevant assets);

b section 879I (restrictions on debits: no business or no qualifying IP assets acquired).

3 The related party condition is met if—

a in a case where the transferor is an individual, the transferor is a related party in relation to the company at the time of the acquisition;

b in a case where the transferor is a firm, any individual who is a member of the transferor is a related party in relation to the company at that time.

4 The third party acquisition condition is met if—

a in a case where the relevant asset is goodwill—

i the transferor acquired all or part of the relevant business in one or more third party acquisitions as part of which the transferor acquired goodwill, and ii the relevant asset is acquired by the company as part of an acquisition of all the relevant business;

b in a case where the relevant asset is not goodwill—

i the transferor acquired the relevant asset in a third party acquisition, and ii the relevant asset is acquired by the company as part of an acquisition of all the relevant business.

5 Section 879L (meaning of relevant business and third party acquisition) applies for the purposes of this section.

6 The amount is— A B where— A is the relevant accounting value of third party acquisitions (see subsections (7) to (9)), and B is the expenditure incurred by the company for or in connection with the acquisition of the relevant asset that is— capitalised by the company for accounting purposes, or recognised in determining the company's profit or loss without being capitalised for accounting purposes, subject to any adjustments under this Part or Part 4 of TIOPA 2010.

7 In a case in which the relevant asset is goodwill, the relevant accounting value of third party acquisitions is the notional accounting value of the goodwill mentioned in subsection (4)(a)(i) (“the previously acquired goodwill”).

8 In a case in which the relevant asset is not goodwill, the relevant accounting value of third party acquisitions is the notional accounting value of the relevant asset.

9 The “notional accounting value” of the previously acquired goodwill, or the relevant asset, is what its accounting value would have been in GAAP-compliant accounts drawn up by the transferor—

a immediately before the relevant asset was acquired by the company, and b on the basis that the relevant business was a going concern.