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CTA09/PART8/S853

Where a company nets off a grant, subsidy or similar sum receivable against the accounting cost of an intangible asset, no adjustment to the sums written off that asset in the accounts will normally be necessary as a result. But the general exemption from corporation tax of certain grants made in Northern Ireland out of UK public funds is preserved under Part 8 (see CA14200).

Where an exempt grant is netted off in this way the sums written off that asset in the accounts should be increased for the purposes of Part 8 by the amount by which the grant has caused the sum written off to be reduced.

Example

For example, assume an asset costing 拢1000, purchased with the aid of an exempt grant of 拢100, is written off on a straight-line basis in a company鈥檚 accounts over 10 years. Its initial cost for accounting purposes is 拢900 (拢1000 - 拢100) and the annual amortisation charge in the accounts is 拢90.

This reflects the recognition of the grant of 拢100 over the same period, effectively at a rate of 拢10 per annum. In computing the deductible debit, therefore, the sum written off the asset each year in the accounts (拢90) should be increased by 拢10 to 拢100.

Grants taken to profit and loss account

See CIRD13030 for the treatment of grants taken to the profit and loss account, and so recognised as accounting gains, as they arise.