Capital Allowances Act 2001 section 471

Determination of entitlement or liability

Section 471 sets out how to determine whether a person is entitled to a writing-down allowance or balancing allowance, or is liable to a balancing charge, for each pool of qualifying patent expenditure in a given chargeable period.

• Entitlement or liability is determined separately for each pool by comparing available qualifying expenditure (AQE) against total disposal receipts (TDR) for the period
• Where AQE exceeds TDR, the person is entitled to a writing-down allowance; where TDR exceeds AQE, the person is liable to a balancing charge
• A balancing allowance (rather than a writing-down allowance) applies only in the final chargeable period for the pool
• The final chargeable period is when the trade permanently ceases (for trade expenditure pools) or when all relevant patent rights end or are wholly disposed of (for non-trade expenditure pools)