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HMRC internal manual

International Manual

HM Revenue & Customs
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Controlled Foreign Companies: Assumed Taxable Total Profits, Assumed Total Profits and the Corporation Tax Assumptions: Intangible Fixed Assets

Intangible Fixed Assets

The computation of assumed taxable total profits of a CFC for the purposes of TIOPA10/Part 9A includes the application of the rules for intangible fixed assets within CTA09/Part 8. Debits and credits related to assets covered by these provisions are included in computing the assumed taxable total profits of the CFC as though it were a UK resident company.

TIOPA10/S371SK requires an assumption that any intangible fixed asset created or acquired by the CFC before the first accounting period in which it becomes subject to Part 9A should be brought into account in the CFC’s first accounting period at its value as recognised for accounting purposes at that time.

However this does not affect the application or otherwise of CTA09/Part 8 to an asset in accordance with section 882 of that Act. This means that intangible fixed assets held by a CFC (or held by a related party and subsequently transferred to the CFC) before 1 April 2002 to which Part 8 would not otherwise apply are not brought within that Part, by virtue of the assumption in TIOPA10/S371SK(2), for the purpose of computing the assumed taxable total profits of the CFC.

There is also a requirement to assume that rollover on reinvestment relief under CTA09/Part 8/Ch7 has not been automatically claimed nor will be claimed by the CFC in respect of the identified intangible fixed asset. However, by virtue of TIOPA10/S371SG(4), the CFC may make such a claim if a notice is given to an officer of HMRC in accordance with the prescribed form and time limits in section 371SG(1).


A CFC holds an intangible asset that it acquired in January 2010 for US$2bn. At the start of its first accounting period the value of the intangible asset for accounting purposes is US$2bn and so this is the value that it is assumed the intangible asset has been acquired for under the assumption at TIOPA10/S371SK(2). The CFC disposes of the asset in accounting period ending 31/12/ 2014 when its net book value is US$1.8bn for US$4.5bn and reinvests the proceeds in another qualifying intangible asset. As the CFC will have chargeable profits for this accounting period, the UK chargeable company to which the CFC’s chargeable profits are apportioned can make a claim under section 371SG for the taxable credit arising on the disposal of the intangible asset to be rolled-over and, subject to meeting all the conditions for roll-over relief in Part 8 of CTA 2009, this relief is given in computing the CFC’s assumed taxable total profits.