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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: international issues: company ceases to be resident in UK or asset ceases to be used in UK trade carried on through a permanent establishment in the UK

FA02/SCH29/PARA108

Circumstances where provision applies

The first is where:

  • a company ceases to be resident in the UK (on or after 1 April 2002),
  • it holds goodwill or an intangible asset which was a ‘chargeable intangible asset’ immediately before hand,
  • that asset ceases to be a ‘chargeable intangible asset’ as a result.

The second is where:

  • a company which is not resident in the UK holds goodwill or an intangible asset for the purposes of a trade it carries on through a permanent establishment in the UK,
  • that asset is a ‘chargeable intangible asset’ in its hands at any time,
  • Immediately after that time the asset ceases to be a chargeable intangible asset (other than by being realised) - normally because it stops being used for the purposes of the UK trade carried on through a permanent establishment in the UK.

An asset is a ‘chargeable intangible asset’ at any time if a gain on its disposal gives rise to a taxable credit under the rules described in CIRD13210 onwards, see CIRD20035.

Treatment

For the purposes of Schedule 29 the company is regarded as:

  • realising the asset and reacquiring it immediately before the asset leaves the UK tax,
  • doing so for at its market value (see CIRD45030) at the time.

In some circumstances it is possible for a company that becomes non-resident to defer the taxable credit as a result, see CIRD47040.

There is no equivalent deferral where the credit arises in the second of the circumstances described above (where the asset ceases to be used for the purposes of a trade carried on by a non-resident company through a UK permanent establishment).

Where valuation of intangible assets is an issue see CIRD10240.