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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: company reorganisations: transfer of non UK trade between EU companies: meaning of terms

Terms used in FA02/SCH29/PARA87

The ‘required basis’ for calculating the notional foreign tax is one that allows losses arising on the transfer to be set against gains to the extent permitted generally by the relevant overseas law and in which all reliefs available to the transferor have been claimed.

If advice is needed on foreign tax regimes, Revenue staff can obtain this from Revenue Policy International, External Relations Group.

‘EU company’ is one incorporated under the law of a member State.

‘Securities’ includes shares.

‘Residence in an EU state’ means a company must be within the charge to tax under that state’s law because it is resident for the purpose of the charge (not simply because it has a source of income there) and it must not be treated as resident in a non-member state by virtue of a tax treaty.

Commercial purpose test

There is a provision for companies to seek advance clearance that the last condition inCIRD42060 (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.

Where a company submits tax computations on the basis that relief under paragraph 87 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 andCounteraction Team.

Unlike the equivalent CG tax provision in TCGA92/S140C, there is no requirement that intangible asset taxable credits and deductible debits resulting from the transfer be aggregated before computing the relief available. Instead companies have toclaim on an asset-by-asset basis.