Transfers of IP in M&A—taxation issues
Produced in partnership with Anne Fairpo of Temple Tax Chambers
Transfers of IP in M&A—taxation issues

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

  • Transfers of IP in M&A—taxation issues
  • Sale of shares
  • Substantial shareholdings exemption—corporate vendors
  • Look-through for rollover relief—corporate vendors
  • Business asset disposal relief—individual vendors
  • Sale of trade and assets
  • Corporate vendors
  • Corporate purchasers
  • Individual vendors
  • VAT

IP may be transferred in corporate transactions either through the sale of shares in a company holding the IP, or as part of the sale of the trade and assets of a business (whether out of a company, or by individual vendors where the business was unincorporated). The tax consequences will vary depending on the nature of the vendor and the purchaser.

Sale of shares

Substantial shareholdings exemption—corporate vendors

Where shares are sold in a corporate transaction, there is no direct impact for IP tax purposes: for example, the transaction does not bring any pre-1 April 2002 assets into the corporate intangibles tax regime, as the assets themselves have not changed hands.

Where the company is, in effect, a wrapper for the IP (eg an IP holding company for non-core IP in a group), there may be an exemption from corporate tax on gains on the sale of the shares by a parent company through the substantial shareholding exemption. There are conditions which must be met for this relief, particularly the requirement that the company be carrying on a trade; this could include active management and dealing in IP. Passive holding of IP as an investment will not, however, qualify. The parent company must have held the shares in the subsidiary for at least one year before the sale.

Look-through for rollover relief—corporate vendors

Where a company acquires the shares

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