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HMRC internal manual

Corporate Intangibles Research and Development Manual

Intangible assets: groups: degrouping: general conditions for adjustment


The conditions for the degrouping adjustment to apply are as follows:

  • Company A has transferred an intangible fixed asset to company B;
  • The relevant asset is a ‘chargeable intangible asset’ (CIRD20035) in the hands of A immediately before the transfer and in the hands of B immediately after the transfer;
  • B must have been a member of the same group as A from the time of the transfer, or have become a member subsequently;
  • B must leave the group after the transfer and before six years have elapsed from the date of the transfer; and
  • The degrouping is not the result of a merger (CIRD40580).


If, at the time it leaves the group, B, or an associated company (CIRD40530), which also leaves the group at that time, holds the asset, then:

  • B is treated as though it had realised and reacquired the asset for its market value, immediately after the asset was transferred to it;
  • The taxable credit or deductible debit on the deemed realisation of the asset is calculated under the rules in CIRD13210 onwards;
  • Its subsequent deductible debits (in particular for sums written off the asset - CIRD12700 onwards) and any taxable credits are revised on the basis that the asset was acquired at market value (rather than on tax-neutral terms); and
  • The adjustments in both categories are then aggregated and a net taxable credit or deductible debit brought into account as if it had arisen immediately before the transferee ceased to be a member of the group.

Classification of net credit or debit

The classification of the credit or debit as a trading etc matter (within CIRD13520), or as a non- trading matter in its CT computation (see CIRD13500 onwards), is determined by the use to which the company put the asset immediately on acquisition. But where the asset was used for a trade, property business or other activity within CIRD13520 at that time and the activity subsequently ceased (before the degrouping adjustment is triggered) the credit or debit should be brought to account as a ‘non-trading’ matter (CIRD13530).

Further guidance


  • CIRD40600 for the case where A and B are not members of the same group at the time of the transfer.
  • CIRD40610 for an example of the degrouping computation.