Transfers within an intangible fixed assets group and degrouping charges
Produced in partnership with Anne Fairpo of Temple Tax Chambers
Transfers within an intangible fixed assets group and degrouping charges

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

  • Transfers within an intangible fixed assets group and degrouping charges
  • Transfers within a group
  • Exceptions to tax-neutral group transfer rules
  • Degrouping charges
  • Exceptions to degrouping charges
  • Reallocation of degrouping charge
  • Restriction on use of losses

FORTHCOMING CHANGE relating to non-UK resident companies: From 6 April 2020, an extended corporation tax charge will be introduced on non-UK resident companies’ profits from UK property. Consequential changes will amend the rules on elections for the transfer of a degrouping charge to encompass where the transferee is a non-UK resident company that carries on a trade of dealing in or developing UK land, or carries on a UK property business. For more, see News Analysis: Budget 2018—Tax analysis—Measures pre-announced.

Transfers within a group

Where an intangible fixed asset is transferred from one group member to another, the transfer will be treated as tax-neutral. For full details of what constitutes a group of companies for the purposes of these rules, see Practice Note: What is an intangible fixed assets group?

A tax-neutral transfer ensures that:

  1. the transfer is regarded as involving neither:

    1. a realisation of the asset by the transferor, nor

    2. an acquisition of the asset by the transferee, and

  2. the transferee is treated:

    1. as having held the asset since the date of acquisition by the transferor, and

    2. as though the transferee had done to the asset anything that was done by the transferor (for example, incurring enhancement expenditure, granting licences, etc)

As a result, the original cost of the asset is treated as though it was the transferee’s original cost,