Periodical payments for licences

Unless you can show that periodical payments are instalments of a capital sum (see below for what constitutes capital expenditure in this context) such payments are deductible. The timing of relief follows generally acceptable accounting practice whereby expenditure is charged against profits over the shorter of the useful life of the asset or the term of the licence (see BIM31030). The central role of accountancy in timing matters was re-affirmed by the Court Of Appeal in Gallagher v Jones [1993] 66TC77 – (see BIM35201).

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