Commentary

B5.646B Restrictions on utilisation of partnership licence related losses

Business tax
Business tax | Commentary

B5.646B Restrictions on utilisation of partnership licence related losses

Business tax | Commentary

Licence income

B5.646B Restrictions on utilisation of partnership licence related losses

Targeted anti-avoidance provisions apply to impose an income tax charge on consideration received for the disposal of a licence by a non-active partner in the early years of trading (first four years) if the partnership trade includes the exploitation of licences1.

For the purposes of this charge a non-active partner includes a limited partner2.

The rules apply if:

  1.  

    •     there is a disposal of a licence acquired in carrying on the partnership trade or a disposal of rights to income from the licence under a related agreement3

  2.  

    •     the individual receives consideration for the disposal not otherwise subject to income tax or to an exit charge under ITA 2007, s 797 (disposal of film rights, see B5.508)4, and

  3.  

    •     the individual has claimed sideways loss relief for a qualifying year in respect of his share of a partnership loss derived to any extent from expenditure on exploiting the licence5; if he was carrying on the trade before 25 March 2004, expenditure on exploiting the licence incurred before 10 February 2004 is excluded6

A licence for this purpose includes an obligation to do something as well as an

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