Commentary

D1.653 Intangible assets degrouping charge—recovery of tax

Corporate tax
Corporate tax | Commentary

D1.653 Intangible assets degrouping charge—recovery of tax

Corporate tax | Commentary

D1.653 Intangible assets degrouping charge—recovery of tax

A degrouping charge normally arises in the company leaving the group, but because of the risk that the purchasing group may not pay the tax liability, HMRC are provided with alternative rights of recovery where any of the corporation tax attributable to a degrouping charge is not paid within six months of its falling due1. The rules are modelled closely on the equivalent rules for capital gains group purposes (see D2.345).

The tax which may be recovered from another person is the lesser of2:

  1.  

    •     the amount of corporation tax referable to the degrouping charge (ie the difference between the tax actually payable and the tax that would have been payable in the absence of the degrouping charge), and

  2.  

    •     the amount unpaid by the defaulting company

If the company liable to the degrouping charge was a member of a group at the date of the event triggering the degrouping charge then the tax can be recovered from the following members of that group3:

  1.  

    •     the

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