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HMRC internal manual

Corporate Intangibles Research and Development Manual

From
HM Revenue & Customs
Updated
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Intangible assets: company reorganisations: transfer of UK trade between EU residents: further conditions

As mentioned in CIRD42030, there are three further conditions to be satisfied before tax neutral treatment under FA02/SCH29/PARA85 is due:

  • A claim for the tax neutral treatment has to be made by both transferor and transferee company.
  • The intangible assets transferred must be chargeable intangible assets (CIRD20035) immediately before and after the transfer in the hands of the respective companies.
  • The transfer must be undertaken for bona fide commercial reasons, and must not form part of a scheme or arrangements where the main (or one of the main) purposes is avoidance of liability to CT, CG tax or income tax - see points to note below.

Commercial purpose test - points to note

  1. There is a provision for companies to seek advance clearance that the third condition above (the commercial purpose test) is satisfied. The Anti-Avoidance Group(Intelligence), Clearance and Counteraction Team deals with all clearance applications and the procedure is described in CIRD42100.

  2. Where a company submits tax computations on the basis that tax neutral treatment under paragraph 85 is available and there is no record of a clearance application, inspectors should send a report and the file to the Anti-Avoidance Group (Intelligence), Clearance and Counteraction Team.