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HMRC internal manual

International Manual

Controlled Foreign Companies: Computation of Chargeable Profits and Creditable Tax: Intangible fixed assets

The computation of chargeable profits for a CFC for the purposes of ICTA88/S747(6) includes the application of the rules for intangible fixed assets originally brought in by FA02/SCH29. Debits, credits and gains on realisation related to assets covered by these provisions are included in computing the chargeable profits of the CFC as though it were a UK resident company.

There are three additional rules which apply to the calculation of a CFC’s chargeable income arising from intangible fixed assets:

  • Intangible fixed assets held by a CFC (or held by a related party and subsequently transferred to the CFC) before 1 April 2002 are not brought within the current rules for intangible fixed assets when computing the chargeable profits of the CFC.
  • Other intangible assets are deemed to be acquired or created at the beginning of the first accounting period of the CFC for which an apportionment is due or an acceptable distribution policy pursued. The value of the asset will be the value which would have been recognised under UK accountancy rules at that time. For more information on accountancy rules see CIRD30010 
  • Roll over on reinvestment relief under CTA09/Part 8/Chapter 7 (previously FA02/SCH29/Part 7) will not be automatically assumed to have been claimed under ICTA88/SCH24/para 4(1). However if the accounting period of the CFC is one that meets the requirements of ICTA88/SCH24/para 4(2), the CFC may make a claim under part 7 within the time limit provided by that section. See INTM255700.