Intangible fixed assets—anti-avoidance
Produced in partnership with Anne Fairpo of Temple Tax Chambers
Intangible fixed assets—anti-avoidance

The following Tax practice note Produced in partnership with Anne Fairpo of Temple Tax Chambers provides comprehensive and up to date legal information covering:

  • Intangible fixed assets—anti-avoidance
  • Tax avoidance arrangements—the principal rule
  • Ceasing to be within scope of UK tax
  • Deferral for pre-1 Jan 2020 exit
  • Restriction of losses on change of company ownership
  • Fungible assets realisation and reacquisition rules
  • Example (assuming no acquisitions from related parties on or after 1 July 2020)

The intangible fixed assets regime (IFA regime) has a principal anti-avoidance rule which applies to tax avoidance arrangements, which is explained further below.

In addition to this principal anti-avoidance rule, there are a number of specific anti-avoidance rules, intended to counter various methods of exploiting the legislation:

  1. cessation of UK residence (ie the deemed market value disposal rule)

  2. loss-buying of non-trade intangible fixed assets

  3. fungible assets realisation and reacquisition rules

These rules are explained further in this Practice Note. Further specific rules also apply counter avoidance, which relate to:

  1. degrouping adjustments, for which, see Practice Note: Transfers within an intangible fixed assets group and degrouping charges—Degrouping charges

  2. business reorganisations which should be tax neutral, subject to a commercial purpose test, for which see Practice Note: Intangible fixed assets on the transfer of a trade

  3. certain related party acquisitions occurring on or after 1 July 2020

  4. transfers between related parties (ie the deemed market value transaction rule), for which, see Practice Note: Intangible fixed assets transactions between related parties, and

  5. timing rules on creation of goodwill

Note that wider corporation tax anti-avoidance rules will also apply to intangible assets where applicable, such as:

  1. transfer pricing, see Practice Note: What is transfer pricing?

  2. controlled foreign companies, see: CFC rules—overview

  3. transfer of deductions, see Practice Note: Group relief—types of losses that can be surrendered—Finance Act 2013 targeted anti-avoidance rules

  4. restriction

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