Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Corporate Finance Manual

From
HM Revenue & Customs
Updated
, see all updates

Other tax rules on corporate debt: transfers of income streams: company transferors: transfers of certain interests in assets regarded as transfers of underlying asset

Company transferors: transfers of certain interests in assets regarded as transfers of underlying asset

CTA10/S757(1) deals with three classes of income transfer which arguably do not involve a transfer of the asset from which the income arises. It states that these are to be treated as transfers of the assets from which the income stems. This ensures that the provisions of S753 will not apply to these income transfers.

The three types of transaction are

  • The grant or surrender of a lease of land
  • The disposal of an interest in an oil licence, and
  • The grant or disposal of any interest in intellectual property which constitutes a pre-2002 asset within the meaning of CTA09/S881.

Example

Q Ltd is the tenant of property and the freehold is held by R Ltd. R grants a lease of the property to S Ltd, still subject to the sublease with Q Ltd. In this way R Ltd has transferred an income stream - the rentals from the sublease - to S Ltd.

S757(1)(a) puts it beyond doubt that this is treated as a transfer of the asset from which the rental income from the sublease stems. The provisions of S753 do not therefore apply.