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Tax deduction of impairment of assets

Tax deduction of impairment of assets


I am currently writing an essay regarding the tax treatment of impairment of assets in various countries across Europe. 

I would appreciate it if someone answers the following question: 
Do the tax authorities in the UK allow the deduction of loss incurred following the recognition of an impairment?

For example, entity owns a mechine and the mechine fair value is 50$, as for today.
The mechine Carrying amount is 100$.

According to IAS 36, the entity should low the carrying amount and write a loss in her books of 100-50=50$.

Can 50 be deducted from the firm income for taxation? 

In addition, please refer me to a formal source (a law or a court ruling) regarding this issue. 

Thanks in advance, 



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11th Nov 2013 07:50

Not allowable

In the UK the accounting adjustment you set out above is not allowable for tax.

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11th Nov 2013 08:22

formal source

Thanks for your answer.


Can you please refer me to a formal source for the citation?

I found this:



It's mainly mention depreciation and I need more of an impairment (altough it looks similiar for tax purpose).




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11th Nov 2013 08:42


You asked specifically about a machine.  In the UK we would normally talk about 'depreciation'.  In other English-speaking jurisdictions (such as our colony on the other side of the Atlantic) they might refer to amortisation.

To add to the confusion, we would be more likely to refer to 'amortisation' (and 'impairment') in the context of intangible assets and goodwill.  For assets and goodwill Part 8 of Corporation Tax Act 2009 http://www.legislation.gov.uk/ukpga/2009/4/part/8 says very broadly that tax should follow generally accepted accounting principles (GAAP) such as IFRS36.  That means that amortisation (depreciation) is allowable for intangibles, but not for plant and machinery.

Thoroughly confused now? 

Welcome to my world of pain.

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11th Nov 2013 09:20


Thanks for your answer as well andrew.hyde.


If I understand correct,

There is no difference, for UK tax purpose, between impairment and depreciation? (as for plant and machinery), and it's not allowed for deduction.

on the other hand, amortisation (depreciation) is allowable for intangible assets? (IAS 36 usually doens't allow to depreciate intangible assts, as far as I know)

Sorry I'm a bit confuesd. Its different all over.


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