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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: avoidance: specific rules

Rules in FA02/SCH29 inhibiting avoidance in specific situations

The following specific rules in Schedule 29 will counter some attempts at exploiting the legislation:

  • where an asset is transferred from a company to a ‘related party’ (or in the other direction) and the asset is within Schedule 29 in the hands of the company the transfer is regarded as taking place at market value (CIRD45030),
  • where a company ceases to be resident in the UK, or where a non-resident ceases to use such an asset for its UK trade carried on through a permanent establishment in the UK, the asset is deemed to be disposed of at market value (CIRD47030),
  • the degrouping adjustment where (broadly) a company to which goodwill or an intangible asset has been transferred on a tax neutral basis, leaves a group (CIRD40500 onwards),
  • tax neutral treatment under Schedule 29 on a business reorganisation is subject to a test of commercial purpose (CIRD42000 onwards),
  • attempts to convert existing fungible assets into assets within Schedule 29 by sale and repurchase (CIRD11770),
  • attempts to convert existing assets into assets within Schedule 29 by sale and finance lease back (CIRD27060).
  • attempts to create new assets from the value of companies existing assets (CIRD48280).
  • attempts to bring goodwill within the regime by misinterpreting rules which determine the timing of creation of goodwill (CIRD48290).