Commentary

D1.649 Intangible assets—degrouping charges

Corporate tax
Corporate tax | Commentary

D1.649 Intangible assets—degrouping charges

Corporate tax | Commentary

D1.649 Intangible assets—degrouping charges

A degrouping event occurs when1:

  1.  

    •     a chargeable intangible asset (see D1.635), referred to as the 'relevant asset', is transferred intra-group, and

  2.  

    •     the transferee was a member of the transferor's group at the time of the transfer or subsequently became such a member, and

  3.  

    •     the transferee leaves the group within six years of the transfer

When the transferee company leaves the transferor's group holding a relevant asset, it is deemed to realise and reacquire the asset immediately after the transfer, for its market value at that time2. This treatment also applies if at the time the transferee leaves the group, the asset is held by an associated company of the transferee company rather than the transferee company itself3. Two companies are associated with each other if one is a 75% subsidiary of the other or both are 75% subsidiaries of another company4.

See also D2.330–D2.334, as regards equivalent capital gains provisions in TCGA 1992, s 179.

There are exemptions from the degrouping charge which are covered in D1.650.

As noted above, the degrouping charge can arise where the transferee company was not a member of the same group as the transferor at the time of transfer, the asset could have been acquired

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