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HMRC internal manual

Corporate Intangibles Research and Development Manual

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HM Revenue & Customs
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Intangible assets: groups: degrouping: unpaid degrouping charge: recovery from others: definitions

Degrouping charge

For the purposes of the alternative recovery provisions, a degrouping charge is defined as:

  • a net taxable credit brought into account on degrouping as set out in CIRD40520, or
  • a taxable credit on the deemed realisation of an asset reallocated on the election described in CIRD40705.

Relevant time

The ‘relevant time’ in the case of company X reallocating a taxable credit on degrouping to company Y is:

  • for a case within FA02/SCH29/PARA58 (CIRD40510) the time when company X ceases to be a member of the group,
  • for a case within FA02/SCH29/PARA60 (CIRD40550) the time when X ceases to satisfy the qualifying condition,
  • if there has been an election for reallocation of a degrouping charge, then the time that would apply under the two bullet points above, assuming that the election had not been made.

Tax on the degrouping charge

This is arrived at by comparing the CT payable for the period with the amount that would have been payable if the degrouping charge had not been made.

Other definitions

For the purposes of FA02/SCH29/PARA68:

  • ‘director’ in relation to a company has the meaning given by ICTA88/S168 (8) read in conjunction with subsection (9), and includes any person falling within ICTA88/S417 (5) read with subsection (6).
  • ‘controlling director’ in relation to a company means a director of the company who has control of it (in accordance with ICTA88/S416 ‘group and ‘principal company’ have the meaning that would be used in accordance with Part 8 of FA02/SCH29 (see CIRD40030 onwards) except that references to a ‘75% subsidiary’ are replaced by references to a ‘51% subsidiary’.