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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Franchising: contents

Various forms of agreement are often described, somewhat loosely, as franchises, for example licences, dealerships and concessions. This section is particularly concerned with the tax implications of payments under `business system franchise agreements’.

The type of situation we are looking at is:

  • Ferdy has established a chain of Needlework & Craft shops. He allows people to run shops using his brand and system. These are franchises. Ferdy is a franchiser.
  • Ferdy has given John the franchise to operate one of these shops. John is a franchisee.

The guidance on know-how allowances for franchisees is at CA70000 onwards.

Intangible assets regime for companies

Where a company acquires or sells a franchise, the Corporation Tax intangible assets regime applies. The regime is introduced at BIM35501, and covered more fully in the CIRD manual. Where the intangible assets regime applies then it takes precedence over the guidance here.

This section contains the following: