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Corporation Tax Act 2009

Type Public General Act

Publication 2009-03-26

Last updated 2025-04-01

State In force

Department Statute Law Database

Source legislation.gov.uk

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Recovery of charge from another group company or controlling director

795

(1) This section applies if—

(a) a company (“A”) is liable to a degrouping charge,

(b) an amount of corporation tax has been assessed on A for the relevant accounting period, and

(c) the whole or part of that amount is unpaid at the end of the period of 6 months after the time when it became payable.

(2) An officer of Revenue and Customs may serve a notice on the persons to whom this subsection applies (see subsections (3) and (4)) requiring them to pay the lesser of—

(a) the amount of corporation tax referable to the degrouping charge (see section 796(2)), or

(b) the amount that remains unpaid of the corporation tax payable for the relevant accounting period by A.

(3) If A was a member of a group at the relevant time, subsection (2) applies to—

(a) a company that was at that time the principal company of the group, and

(b) any other company that at any time in the period of 12 months ending with the relevant time—

(i) was a member of that group, and

(ii) owned the relevant asset or any part of it.

(4) If at the relevant time A is not UK resident ... , subsection (2) applies to any person who is a controlling director—

(a) of A,

(b) of a company that has control of A,

or was such a controlling director during that period.

(5) Section 796 applies for the interpretation of this section and in that section references to “A” must be read in accordance with this section.

Interpretation of section 795

796

(1) For the purposes of section 795 and this section—

“the relevant accounting period” is the accounting period in which the degrouping charge falls to be brought into account by A,

“the relevant time” is—in a case within section 780, when A ceased to be a member of the group,in a case within section 785, when A ceased to meet the qualifying condition (within the meaning of that section), andif there has been an election under section 792, the time that would have been the relevant time under paragraph (a) or (b) had there been no such election, and

“the relevant asset” is the asset in respect of which the degrouping charge arises.

(2) For the purposes of section 795 the amount of corporation tax referable to a degrouping charge is the difference between—

(a) the tax in fact payable for the relevant accounting period, and

(b) the tax that would have been payable for that period in the absence of the degrouping charge.

(3) References in section 795 and this section to a degrouping charge are to—

(a) a credit required to be brought into account under section 780(3) or 785(4), or

(b) if there has been an election under section 792, a credit required to be brought into account as a result of the election.

(4) In section 795 and this section—

“director”, in relation to a company—has the meaning given by section 67(1) of ITEPA 2003 (read with section 67(2) of that Act) andincludes any person falling within section 452(1) of CTA 2010 ,

“controlling director”, in relation to a company, means a director of the company who has control of it, and

“group” and “principal company” have the meaning that would be given by Chapter 8 if in that Chapter for references to 75% subsidiaries there were substituted references to 51% subsidiaries.

(5) In subsection (4) “control” is to be read in accordance with sections 450 and 451 of CTA 2010.

Recovery under section 795: procedure etc

797

(1) A notice served under section 795(2) may require the payment of the amount required to be paid by the notice within 30 days of the service of the notice.

(2) The notice must state—

(a) the amount of the tax referable to the degrouping charge (within the meaning given in section 796(2)),

(b) the amount of corporation tax assessed on A for the relevant accounting period that remains unpaid,

(d) the amount required to be paid by the person on whom the notice is served.

(3) The notice has effect—

(a) for the purposes of the recovery from that person of the amount required to be paid and of interest on that amount, and

(b) for the purposes of appeals,

as if it were a notice of assessment and that amount were an amount of tax due from that person.

(4) A person who has paid an amount required to be paid by a notice under section 795(2) may recover the amount paid from A.

(5) A payment required to be made by such a notice is not allowed as a deduction in calculating any income, profits or losses for any tax purposes.

(6) In this section “A” and “the relevant accounting period” have the same meaning as in section 795 (see section 795(1) and section 796(1) respectively).

Recovery under section 795: time limit

798

(1) A notice under section 795(2) must be served before the end of the period of 3 years beginning with the date on which A's liability to corporation tax for the relevant accounting period is finally determined.

(2) In subsection (1) “A” and “the relevant accounting period” have the same meaning as in section 795 (see section 795(1) and section 796(1) respectively).

(3) If the unpaid tax is charged because of a determination under paragraph 36 or 37 of Schedule 18 to FA 1998 (determination where no return delivered or return incomplete), the date mentioned in subsection (1) is the date on which the determination was made.

(4) If the unpaid tax is charged in a self-assessment, the date mentioned in subsection (1) is the latest of—

(a) the last date on which notice of enquiry may be given into the return containing the self-assessment,

(b) if notice of enquiry is given, 30 days after the enquiry is completed,

(d) if after such an enquiry an officer of Revenue and Customs amends the return, 30 days after notice of the amendment is issued, and

(e) if an appeal is brought against such an amendment, 30 days after the appeal is finally determined.

(5) If the unpaid tax is charged in a discovery assessment, the date mentioned in subsection (1) is—

(a) if there is no appeal against the assessment, the date when the tax becomes due and payable, and

(b) if there is such an appeal, the date on which the appeal is finally determined.

(6) In this section—

“self-assessment” includes a self-assessment that supersedes a determination as a result of paragraph 40 of Schedule 18 to FA 1998, and

“discovery assessment” means an assessment under paragraph 41(1) of that Schedule.

Disregard of payments between group members for reliefs

799

(1) If a payment for group roll-over relief or for the reallocation of a degrouping charge does not exceed the amount of the relevant relief—

(a) it is not taken into account in calculating profits or losses of either of the companies involved for corporation tax purposes, and

(b) it is not a distribution for any of the purposes of the Corporation Tax Acts.

(2) A payment for group roll-over relief is a payment made—

(a) in connection with a claim for relief under Chapter 7 (roll-over relief in case of realisation and reinvestment) made because of—

(i) section 777 (relief on realisation and reinvestment: application to group member), or

(ii) section 779 (rules that apply to cases within section 778(1)),

(b) by the company whose proceeds of realisation are reduced as a result of the claim,

(c) to a company whose acquisition costs are reduced (in a case within section 777) or the tax written-down value of whose assets is reduced (in a case within section 779) as a result of the claim, and

(d) in accordance with an agreement between those companies in connection with the claim.

(3) A payment for the reallocation of a degrouping charge is a payment made—

(a) in connection with an election under section 792 (reallocation of charge within group),

(b) by the company to which the chargeable realisation gain accrues,

(d) in accordance with an agreement between those companies in connection with the election.

(4) In the case of a payment in connection with such a claim for relief as is mentioned in section 777(3), the amount of the relevant relief is the amount of the reduction, as a result of the claim, in the acquisition costs of the company to which the payment is made.

(5) In the case of a payment in connection with such a claim for relief as is mentioned in section 778(4), the amount of the relevant relief is the amount of the reduction, as a result of the claim, in the tax written-down value of the assets of the company to which the payment is made.

(6) In the case of a payment in connection with an election under section 792, the amount of the relevant relief is the amount treated as a result of the election as accruing to the company to which the payment is made.

Chapter 10 — Excluded assets

Introductory

Introduction

800

(1) This Chapter provides for the exclusion from this Part of certain assets.

(2) This Chapter provides for 3 kinds of exclusion—

(a) assets within sections 803 to 809 are wholly excluded from this Part,

(b) assets within sections 810 to 813 are excluded from this Part except as respects royalties, and

(c) assets within any of sections 814 to 816A are excluded from this Part to the extent specified in the section concerned.

(3) For further rules about the exclusion of assets from this Part, see—

(a) Chapter 16 (pre-FA 2002 assets etc), ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Right to dispose of or acquire excluded asset also excluded

801

So far as an asset of any description is excluded from this Part by this Chapter, an option or other right to acquire or dispose of an asset of that description is similarly excluded.

Effect of partial exclusion

802

(1) If because of any of sections 803 to 815 an asset is excluded to the extent that—

(a) it represents particular rights,

(b) it is an asset of a particular description,

(d) it represents expenditure of a particular kind,

this Part applies as if there were a separate asset representing so much of the asset as is not so excluded.

(2) The other provisions of the Corporation Tax Acts apply as if there were a separate asset representing so much of the asset as is excluded.

(3) Any apportionment necessary for the purposes of this section must be made on a just and reasonable basis.

Assets wholly excluded from this Part

Non-commercial purposes etc

803

This Part does not apply to an intangible fixed asset so far as it is held—

(a) for a purpose that is not a business or other commercial purpose of the company, or

(b) for the purpose of activities in respect of which the company is not within the charge to corporation tax , otherwise than as a result of Chapter 3A of Part 2.

Assets for which capital allowances previously made

804

(1) This Part does not apply to an intangible asset of a company if conditions A, B and C are met.

(2) Condition A is that the asset falls to be treated as an intangible asset in accounts of the company.

(3) Condition B is that in a previous period of account the asset fell to be treated as a tangible asset in accounts of the company.

(4) Condition C is that an allowance under Part 2 of CAA 2001 (plant and machinery allowances) was made to the company in respect of the asset on the basis that it was a tangible asset.

Rights over tangible assets

805

This Part does not apply to an intangible fixed asset so far as it represents—

(a) rights enjoyed by virtue of an estate, interest or right in or over land, or

(b) rights in relation to tangible movable property.

Financial assets

806

(1) This Part does not apply to financial assets.

(2) In this Part “financial asset” has the same meaning as it has for accounting purposes.

(3) “Financial asset” includes—

(a) loan relationships (see Parts 5 and 6),

(b) derivative contracts (see Part 7),

(ca) assets so far as they are derived from, or are referable to, contracts or policies of insurance or capital redemption policies, and

(d) rights under a collective investment scheme within the meaning of FISMA 2000 (see section 235 of that Act).

Rights in companies, trusts etc

807

(1) This Part does not apply to an asset so far as it represents—

(a) shares or other rights in relation to the profits, governance or winding up of a company,

(b) rights under a trust, or

(2) Subsection (1)(b) does not apply to rights that for accounting purposes fall to be treated as representing an interest in trust property that is an intangible fixed asset to which this Part applies.

(3) Subsection (1)(c) does not apply to an interest that for accounting purposes falls to be treated as representing an interest in partnership property that is an intangible fixed asset to which this Part applies.

Assets representing production expenditure on films

807A

This Part does not apply to an intangible fixed asset held by a company treated as carrying on a separate trade under any of Parts 14A to 15E (production of films, television programmes, video games, theatrical productions, orchestral concerts and museum and gallery exhibitions), so far as the asset represents expenditure of that separate trade.

Oil licences

809

(1) This Part does not apply to an oil licence or an interest in an oil licence.

(1A) The reference in subsection (1) to an oil licence or an interest in an oil licence includes all goodwill, and any intangible asset, which relates to, derives from or is connected with an oil licence or an interest in an oil licence.

(2) In this section “oil licence” means a UK oil licence or a foreign oil concession.

(3) In this section—

“UK oil licence” means a licence under—Part 1 of the Petroleum Act 1998 (c. 17) (“the 1998 Act”), orthe Petroleum Production (Northern Ireland) Act 1964 (c. 28 (N.I.)) (“the 1964 Act”),authorising the winning of oil, and

“foreign oil concession” means any right that—is a right to search for or win oil that exists in its natural condition in a place to which neither the 1998 Act nor the 1964 Act applies, andis conferred or exercisable (whether or not under a licence) in relation to a particular area.

(4) In this section “interest in an oil licence” includes any entitlement under an agreement to, or to a share of, oil or the proceeds of its sale if the agreement—

(a) relates to oil from the whole or a part of the licensed area, and

(b) was made before the extraction of the oil to which it relates.

(5) In subsection (4)(a) “licensed area” means—

(a) in relation to a UK oil licence, the area to which the licence applies, and

(b) in relation to a foreign oil concession, the area in relation to which the right to search for or win oil is conferred or exercisable under the concession.

(6) In this section “oil”—

(a) in relation to a UK oil licence, means any substance won or capable of being won under the authority of a licence granted under Part 1 of the 1998 Act or the 1964 Act, other than methane gas won in the course of making and keeping mines safe, and

(b) in relation to a foreign oil concession, means any petroleum (as defined in section 1 of the 1998 Act).

Assets excluded from this Part except as respects royalties

Mutual trade or business

810

(1) Except as respects royalties, this Part does not apply to an intangible fixed asset so far as it is held for the purposes of any mutual trade or business.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sound recordings

811

(1) Except as respects royalties, this Part does not apply to an intangible fixed asset held by a company so far as it represents expenditure by the company on the production or acquisition of the master version of a sound recording.

(2) For this purpose—

(a) “sound recording” does not include a film soundtrack,

(b) “master version” means master tape or master audio disc of the recording, and

Master versions of films

812

(1) Except as respects royalties, this Part does not apply to an intangible fixed asset held by a company so far as it represents expenditure by the company—

(a) on the production of the original master version of a film that began principal photography before 1 January 2007, or

(b) on the acquisition before 1 October 2007 of such an original master version.

(2) In this section—

(a) “film” has the same meaning as in Part 15 (see section 1181),

(b) “original master version” means the original negative, tape or disc, and

(i) the original master version of the film soundtrack, if any, and

(ii) any rights in the original master version that are held or acquired with it.

813

Except as respects royalties, this Part does not apply to an intangible fixed asset held by a company so far as it represents expenditure by the company on computer software that falls to be treated for accounting purposes as part of the costs of the related hardware.

Assets excluded from this Part to the extent specified

Research and development

814

(1) This section applies to an intangible fixed asset held by a company so far as it represents expenditure by the company on research and development.

(2) Chapter 2 (credits in respect of intangible fixed assets) does not apply to the asset, except for—

(a) section 721 (receipts recognised as they accrue), and

(b) section 722 (receipts in respect of royalties so far as not dealt with under section 721).

(3) Chapter 3 (debits in respect of intangible fixed assets) does not apply to the asset, except for section 732 (debit on reversal of previous accounting gain) so far as that section relates to credits previously brought into account under section 721 or 722.

(4) Chapter 4 (realisation of intangible fixed assets) applies to the asset as if its cost did not include any expenditure on research and development.

(5) In this section “research and development” has the meaning given by section 1138 of CTA 2010 and includes oil and gas exploration and appraisal.

Election to exclude capital expenditure on software

815

(1) If a company so elects in respect of capital expenditure by the company on computer software, this section applies to an intangible fixed asset held by the company so far as it represents the expenditure.

(2) Chapter 2 (credits in respect of intangible fixed assets) does not apply to the asset, except for—

(a) section 721 (receipts recognised as they accrue), and

(b) section 722 (receipts in respect of royalties so far as not dealt with under section 721).

(3) Chapter 3 (debits in respect of intangible fixed assets) does not apply to the asset, except for section 732 (debit on reversal of previous accounting gain) so far as that section relates to credits previously brought into account under section 721 or 722.

(4) Chapter 4 (realisation of intangible fixed assets) applies as if the cost of the asset did not include any expenditure in respect of which an election under this section has been made.

(5) A credit is required to be brought into account under this Part in respect of the asset only so far as the receipts to which the credit relates are not taken into account in calculating disposal values under section 72 of CAA 2001.

(6) The references in this section and section 816—

(a) to capital expenditure, and

(b) to the time when such expenditure is incurred,

have the same meaning as if this section were in CAA 2001.

(7) Section 816 makes further provision about elections under this section.

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Further provision about elections under section 815

816

(1) An election under section 815 must specify the expenditure to which it relates.

(2) The election must be made not more than 2 years after the end of the accounting period in which the expenditure was incurred.

(3) The election must be made in writing to an officer of Revenue and Customs.

(4) The election is irrevocable.

Chapter 11 — Transfer of business or trade

Introduction

Overview of Chapter

817

(1) This Chapter contains provisions—

(a) treating some transfers of assets as tax-neutral transfers for the purposes of this Part (see sections 818, 820, 822, 824 and 826), and

(b) giving relief in respect of the transfer of assets to a non-UK resident company (see sections 827 to 830).

(2) Sections 831 to 833 deal with the genuine commercial transaction requirement (which applies in some cases for the treatment mentioned in subsection (1)(a)).

(3) For the consequences of a transfer being tax-neutral for the purposes of this Part, see section 776.

Tax-neutral transfers

Company reconstruction involving transfer of business

818

(1) This section applies if—

(a) a scheme of reconstruction involves the transfer of the whole or part of the business of one company (“the transferor”) to another company (“the transferee”), and

(b) the transferor receives no part of the consideration for the transfer (otherwise than by the transferee taking over the whole or part of the liabilities of the business),

but see subsections (3) to (5).

(2) If the transfer includes intangible fixed assets that—

(a) are chargeable intangible assets in relation to the transferor immediately before the transfer, and

(b) are chargeable intangible assets in relation to the transferee immediately after the transfer,

the transfer of those assets is tax-neutral for the purposes of this Part.

(3) This section does not apply if the transfer is one to which section 775 (transfers within a group) applies.

(4) This section does not apply if the transferor or the transferee is—

(a) a qualifying society within the meaning of section 461A of ICTA (incorporated friendly societies entitled to exemption from tax), or

(b) a dual resident investing company within the meaning of section 949 of CTA 2010 (dual resident investing companies).

(5) This section applies only if the reconstruction meets the genuine commercial transaction requirement (see section 831).

(6) In this section “scheme of reconstruction” has the same meaning as it has in section 136 of TCGA.

European cross-border transfers of business: introduction

819

(1) Section 820 applies if—

(a) condition A or B is met, and

(b) each of the companies mentioned in subsection (2)(a) or (3)(a) makes a claim under this section,

but see section 820(2) and (3).

(2) Condition A is that—

(a) a relevant company resident in one relevant state transfers the whole or part of the business carried on by it in the United Kingdom to a relevant company resident in another relevant state, and

(b) the transfer is wholly in exchange for securities issued by the transferee to the transferor.

(3) Condition B is that—

(a) a relevant company transfers part of its business to one or more relevant companies,

(b) the transferor is resident in one relevant state,

(d) at least one transferee is resident in a relevant state other than that in which the transferor is resident,

(e) the transferor continues to carry on a business after the transfer, and

(f) the transfer—

(i) is made in exchange for the issue of shares in or debentures of each transferee to the persons holding shares in or debentures of the transferor, or

(ii) is not so made only because, and only so far as, a transferee is prevented from so issuing such shares or debentures by section 658 of the Companies Act 2006 (c. 46) (general rule against limited company acquiring own shares) or by a corresponding provision of the law of a relevant state preventing such an issue.

(4) For the purposes of this Chapter, a company is resident in a relevant state if—

(a) it is within a charge to tax under the law of the relevant state as being resident for that purpose, and

(b) it is not regarded, for the purpose of any double taxation relief arrangements to which the relevant state is a party, as resident in a territory not within a relevant state.

(5) In this section and section 820—

(a) “company” means any entity listed as a company in Part A of Annex I to the Mergers Directive,

(ba) “relevant company” means a body incorporated under the law of a relevant state,

(bb) “relevant state” means the United Kingdom or a member State,

(d) “transferee” has the same meaning as in subsection (2) or (3), and

(e) “the transferor” has the same meaning as in subsection (2) or (3).

Transfer of assets on European cross-border transfer of business

820

(1) If the transfer of business includes intangible fixed assets that—

(a) are chargeable intangible assets in relation to the transferor immediately before the transfer, and

(b) are chargeable intangible assets in relation to the transferee immediately after the transfer,

the transfer of those assets is tax-neutral for the purposes of this Part.

(2) This section applies only if the transfer of the business or part meets the genuine commercial transaction requirement (see section 831).

(3) This section does not apply if the transferor is a transparent entity.

(4) In this section—

“the transfer of business” means the transfer of business mentioned in section 819(2)(a) or (3)(a), and

“transparent entity” means a company which is resident in a member State ... and does not have an ordinary share capital.

(5) For the purposes of subsection (4) an entity is resident in a relevant state if—

(a) it is within a charge to tax under the law of the relevant state as being resident for that purpose, and

(b) it is not regarded, for the purposes of any double taxation relief arrangements to which the relevant state is a party, as resident in a territory not within a relevant state.

European cross-border mergers: introduction

821

(1) Section 822 applies if the following conditions are met in the case of any merger—

(a) conditions A, B and C,

(b) in the case of a merger within subsection (2)(a), (b) or (c), condition D, and

but see section 822(3) to (5)).

(2) Condition A is that—

(a) an SE is formed by the merger of two or more companies in accordance with Articles 2(1) and 17(2)(a) or (b) of Council Regulation (EC) No. 2157/2001 on the Statute for a European company (Societas Europaea),

(b) an SCE is formed by the merger of two or more co-operative societies, at least one of which is a society registered under the Co-operative and Community Benefit Societies Act 2014, in accordance with Articles 2(1) and 19 of Council Regulation (EC) No. 1435/2003 on the Statute for a European Co-operative Society (SCE),

(c) a merger is effected by the transfer by one or more companies of all their assets and liabilities to a single existing company, or

(d) a merger is effected by the transfer by two or more companies of all their assets and liabilities to a single new company (other than an SE or an SCE) in exchange for the issue by the transferee, to each person holding shares in or debentures of a transferor, of shares or debentures.

(3) Condition B is that each merging company is resident in a relevant state.

(4) Condition C is that the merging companies are not all resident in the same relevant state.

(5) Condition D is that—

(a) the transfer of assets and liabilities to the transferee in the course of the merger is made in exchange for the issue of shares or debentures by the transferee to each person holding shares in or debentures of a transferor, or

(b) that transfer of those assets and liabilities is not so made only because, and only so far as, a transferee is prevented from so issuing such shares or debentures by section 658 of the Companies Act 2006 (c. 46) (general rule against limited company acquiring own shares) or by a corresponding provision of the law of a member State preventing such an issue.

(6) Condition E is that in the course of the merger each transferor ceases to exist without being in liquidation (within the meaning given by section 247 of the Insolvency Act 1986 (c. 45)).

(7) For the meaning of expressions used in this section, see section 823.

Transfer of assets on European cross-border merger

822

(1) If this section applies, the transfer of qualifying assets in the course of the merger is tax-neutral for the purposes of this Part.

(2) For the purposes of this section an asset is a qualifying asset if—

(a) it is a chargeable intangible asset in relation to the transferor immediately before the transfer, and

(b) it is a chargeable intangible asset in relation to the transferee immediately after the transfer.

(3) This section does not apply if section 818 (company reconstruction involving transfer of business) applies to any qualifying assets transferred in the course of the merger.

(4) This section does not apply if—

(a) one or more of the merging companies is a transparent entity, and

(b) the assets and liabilities of a transparent entity are transferred to another company in the course of the merger.

(5) This section applies only if the merger meets the genuine commercial transaction requirement (see section 831).

(6) For the meaning of expressions used in this section, see section 823.

Interpretation of sections 821 and 822

823

(1) This section applies for the interpretation of sections 821 and 822 and this section.

(1A) “Relevant state” means the United Kingdom or a member State.

(2) “Transferor” means—

(a) in relation to a merger within section 821(2)(a), a company merging to form the SE,

(b) in relation to a merger within section 821(2)(b), a co-operative society merging to form the SCE, and

(3) “Transferee” means—

(a) in relation to a merger within section 821(2)(a), the SE,

(b) in relation to a merger within section 821(2)(b), the SCE, and

(c) in relation to a merger within section 821(2)(c) or (d), the company to which assets and liabilities are transferred.

(4) “Transparent entity” has the meaning given in section 820(4).

(5) References to a company are references to any entity listed as a company in Part A of Annex I to the Mergers Directive.

(6) In section 821 and this section “co-operative society” means a society registered under the Co-operative and Community Benefit Societies Act 2014 or a similar society governed by the law of a member State ....

Transfer of business of building society to company

824

(1) This section applies if—

(a) there is a transfer of the whole of a building society's business to a company (“the successor company”) in accordance with section 97 and the other applicable provisions of the Building Societies Act 1986 (c. 53),

(b) the transfer includes intangible fixed assets,

(d) those assets are chargeable intangible assets in relation to the successor company immediately after the transfer.

(2) The transfer of those assets is tax-neutral for the purposes of this Part.

(3) For the application of sections 780 and 785 in cases where this section applies, see section 825.

(4) In that section “the successor company” has the same meaning as in this section.

Application of sections 780 and 785 where transfer within section 824 occurs

825

(1) This section deals with the application of—

(a) section 780 (deemed realisation and reacquisition at market value), and

(b) section 785 (principal company becoming member of another group),

where there is a transfer within section 824.

(2) If, because of the transfer, a company ceases to be a member of the same group as the building society, that event does not cause section 780 or 785 to apply as respects any asset acquired by the company from the building society or any other member of the same group.

(3) If the building society and the successor company are members of the same group at the time of the transfer but later cease to be, that later event does not cause section 780 or 785 to apply to any asset to which this subsection applies.

(4) Subsection (3) applies to—

(a) any asset acquired by the successor company on or before the transfer from the building society or any other member of that same group, or

(b) any asset acquired from the building society or any other member of that group by a company other than the successor company that is a member of that group at the time of the transfer.

(5) Subsection (6) applies if a company which is a member of the same group as the building society at the time of the transfer—

(a) ceases to be a member of that group and becomes a member of the same group as the successor company, and

(b) later ceases to be a member of that group.

(6) Section 780 applies on that later event as if any asset to which this subsection applies that has not been acquired from the successor company had been so acquired.

(7) Subsection (6) applies to—

(a) any asset acquired by the company from the building society when the company and the building society were members of the same group, or

(b) any asset acquired by the company from another company which is a member of the same group at the time of the transfer, when the company, the building society and the other company, were members of the same group.

(8) Subsection (6) does not apply if—

(a) the company which acquired the asset is a 75% subsidiary of the company from which it was acquired, or vice versa,

(b) those companies cease simultaneously to be members of the same group as the successor company, and

Amalgamation of, or transfer of engagements by, certain societies

826

(1) This section applies if—

(a) two or more societies to which this section applies amalgamate or there is a transfer of engagements from one such society to another,

(b) in the course of the amalgamation or transfer of engagements or as part of it intangible fixed assets are transferred from one society (“the transferor”) to another (“the transferee”),

(d) those assets are chargeable intangible assets in relation to the transferee immediately after the transfer.

(2) The transfer of those assets is tax-neutral for the purposes of this Part.

(3) This section applies to—

(a) a building society,

(b) a registered society, and

(c) a co-operative association in relation to which section 1057 of CTA 2010 (UK agricultural or fishing co-operatives) applies.

Transfer of assets to non-UK resident company

Claims to postpone charge on transfer

827

(1) This section applies if—

(a) a UK resident company carrying on a trade outside the United Kingdom through a permanent establishment (“the transferor”) transfers that trade or part of it to a non-UK resident company (“the transferee”),

(b) the transfer meets conditions A, B and C,

(c) the transfer includes intangible fixed assets that are chargeable intangible assets in relation to the transferor immediately before the transfer (“relevant assets”), and

(d) the transferor makes a claim under this section.

(2) If this section applies, this Part applies in accordance with sections 828 to 830.

(3) Condition A is that the transfer includes—

(a) the whole assets of the transferor used for the purposes of the trade or part, or

(b) the whole of those assets other than cash.

(4) Condition B is that the transfer is wholly or partly in exchange for securities consisting of—

(a) shares within subsection (5) that are issued by the transferee to the transferor, or

(b) shares within paragraph (a) and loan stock that is so issued.

(5) Shares are within this subsection if they—

(a) amount in all to at least one quarter of the ordinary share capital of the transferee, or

(b) do so if taken together with any other shares in the transferee already held by the transferor.

(6) Condition C is that the transfer meets the genuine commercial transaction requirement (see section 831).

(7) No claim may be made under this section if a claim is made in relation to the transfer under section 116(6) of TIOPA 2010 (European cross-border transfers of business: application for section 117 of that Act to apply).

(8) In sections 828 to 830 “transferor”, “transferee” and “relevant assets” have the same meaning as in this section.

Relief on transfer

828

(1) If the proceeds of realisation of a relevant asset exceed the cost of the asset recognised for tax purposes, the proceeds are treated as reduced.

(2) If the securities are the whole consideration for the transfer, the reduction is by the amount of the excess.

(3) If the securities are not the whole of that consideration, the reduction is by the appropriate proportion of the excess.

(4) In subsection (3) “the appropriate proportion” means the proportion that the market value of the securities at the time of the transfer bears to the market value of the whole of the consideration at that time.

Charge on subsequent realisations

829

(1) If at any time after the transfer the transferor realises the whole or part of the securities held by it immediately before that time, the transferor must bring into account for tax purposes a credit equal to the whole or the appropriate proportion of the total deferred gain.

(2) In subsection (1)—

“the total deferred gain” means the sum of the amounts by which the proceeds of realisation of relevant assets were reduced under section 828(2) or (3), so far as not already taken into account under subsection (1) or (3) of this section, and

“the appropriate proportion” means the proportion that the market value of the part of the securities realised bears to the market value of the securities held immediately before the realisation.

(3) If at any time within 6 years after the transfer the transferee realises all or some of the relevant assets held by it immediately before that time, the transferor must bring into account for tax purposes a credit equal to the whole or the appropriate proportion of the total deferred gain.

(4) In subsection (3)—

“the total deferred gain” has the meaning given in subsection (2), and

“the appropriate proportion” means the proportion that the deferred gain attributable to the relevant assets realised bears to the deferred gain attributable to the relevant assets held immediately before the realisation.

(5) For the purposes of subsection (4) the deferred gain attributable to relevant assets means the sum of the amounts by which the proceeds of realisation of those assets were reduced under section 828(2) or (3).

(6) For cases where transfers are ignored for the purposes of subsection (1) or (3), see section 830.

Exclusion from section 829 of group transfers

830

(1) For the purposes of section 829(1), any disposal within section 171 of TCGA 1992 (transfers within a group) is ignored.

(2) For the purposes of section 829(3), any transfer by one member of a group to another is ignored.

(3) This subsection applies if—

(a) a person (“A”) acquires securities on a transfer that is ignored under subsection (1), and

(b) any previous transfer that has occurred was ignored under subsection (1) or (2).

(4) If subsection (3) applies, a subsequent realisation of the securities by A is treated as a realisation by the transferor.

(5) This subsection applies if—

(a) a person (“B”) acquires an asset on a transfer that is ignored under subsection (2), and

(b) no previous transfer has occurred that was not ignored under subsection (1) or (2).

(6) If subsection (5) applies, a subsequent realisation of the asset by B is treated as a realisation by the transferee.

The genuine commercial transaction requirement and clearance

831

(1) For the purposes of this Chapter, a reconstruction, transfer or merger meets the genuine commercial transaction requirement if it—

(a) is effected for genuine commercial reasons, and

(b) does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoidance of liability to corporation tax, capital gains tax or income tax.

(2) The conditions in subsection (1) are treated as met if before the reconstruction, transfer or merger—

(a) the appropriate applicant has applied to the Commissioners for Her Majesty's Revenue and Customs, and

(b) the Commissioners have notified the appropriate applicant that they are satisfied that the requirements of subsection (1) will be met.

(3) In subsection (2) “the appropriate applicant” means—

(a) in the case of an application about a reconstruction within section 818(1)(a), the transferee (within the meaning of that section),

(b) in the case of an application about a transfer falling within section 820 because condition A in section 819(2) is met, the transferor and the transferee (within the meaning of section 819(2)),

(c) in the case of an application about a transfer falling within section 820 because condition B in section 819(3) is met, the transferor and the transferee (within the meaning of section 819(3)),

(d) in the case of an application about a merger falling within section 821(2), the transferor (as defined in section 823(2)), and

(e) in the case of an application about a transfer falling within section 827(1)(a), the transferor (within the meaning of that section).

(4) For the procedure on such an application, see section 832.

Procedure on application for clearance

832

(1) This section applies in relation to an application under section 831(2).

(2) The application must be in writing and must contain particulars of the operations that are to be effected.

(3) The Commissioners for Her Majesty's Revenue and Customs may by notice require the applicant to provide further particulars for the purpose of enabling them to make their decision.

(4) Such a notice may only be given within 30 days of the receipt of the application or of any further particulars previously required under subsection (3).

(5) If such a notice is not complied with within 30 days or such longer period as the Commissioners for Her Majesty's Revenue and Customs may allow, they need not proceed further on the application.

Decision on application for clearance

833

(1) The Commissioners for Her Majesty's Revenue and Customs must notify their decision on an application under section 831(2) to the applicant—

(a) within 30 days of receiving the application, or

(b) if they give a notice under section 832(3), within 30 days of the notice being complied with.

(2) If the Commissioners for Her Majesty's Revenue and Customs—

(a) notify the applicant that they are not satisfied that the conditions in section 831(1) will be met, or

(b) do not notify their decision to the applicant within the time required by subsection (1),

the applicant may within 30 days of the notification or of that time require them to transmit the application to the tribunal, together with any notice given and further particulars provided under section 832(3).

(3) In that case any notification by the tribunal has effect for the purposes of section 831(2)(b) as if it were a notification by the Commissioners for Her Majesty's Revenue and Customs.

(4) If any particulars provided under section 832 do not fully and accurately disclose all facts and considerations material for the decision—

(a) of the Commissioners for Her Majesty's Revenue and Customs, or

(b) of the tribunal,

any resulting notification by the Commissioners for Her Majesty's Revenue and Customs or the tribunal is void.

Introductory

Overview of Chapter

834

(1) This Chapter deals with the question whether a person and a company are related parties for the purposes of this Part.

(2) That question is relevant, in particular, for Chapter 13 (transactions between related parties).

835

(1) This section explains when a person (“A”) is a “related party” in relation to a company (“B”) for the purposes of this Part.

(2) In a case where A is a company, A is a related party in relation to B if—

(a) A has control of, or holds a major interest in, B, or

(b) B has control of, or holds a major interest in, A.

(3) In a case where A is a company, A is a related party in relation to B if A and B are both under the control of the same person (but see subsection (4)).

(4) Subsection (3) does not apply if the person controlling both A and B is—

(a) the Crown,

(b) a Minister of the Crown or a government department,

(d) the National Assembly for Wales,

(e) a Minister within the meaning of the Northern Ireland Act 1998 (c. 47) or a Northern Ireland department,

(f) a foreign sovereign power, or

(g) an international organisation.

(5) A is a related party in relation to B if B is a close company and A is, or is an associate of—

(a) a participator in B, or

(b) a participator in a company that has control of, or holds a major interest in, B.

(6) In a case where A is a company, A is a related party in relation to B if B is another company in the same group.

(7) A is treated as being a related party in relation to B if A would be so but for any person (other than an individual) being the subject of—

(a) insolvency arrangements, or

(b) equivalent arrangements under the law of any country or territory, whether made when the person is solvent or insolvent.

(8) In subsection (7) “insolvency arrangements” includes—

(a) arrangements under which a person acts as the liquidator, provisional liquidator, receiver, administrator or administrative receiver of a company or firm, and

(b) voluntary arrangements proposed or approved in relation to a company or firm under Part 1 of the Insolvency Act 1986 (c. 45) or Part 2 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).

(9) In subsection (8)—

“administrative receiver” has the meaning given in section 251 of the Insolvency Act 1986 or Article 5(1) of the Insolvency (Northern Ireland) Order 1989,

“administrator” means a person appointed to manage the affairs, business and property of the company or firm under Schedule B1 to that Act or Order,

“receiver” means a person appointed as receiver of some or all of the property of the company or firm under an enactment or under an instrument issued for the purpose of representing security for, or the rights of creditors in respect of, any debt.

(10) For the meaning of “control”, “major interest”, “associate”, “participator”, see sections 836, 837 and 841.

“Control”

836

(1) For the purposes of this Chapter, in relation to a company, “control” means the power of a person to secure that the company's affairs are conducted in accordance with the person's wishes—

(a) by means of the holding of shares or the possession of voting power in or in relation to the company or any other company, or

(b) as a result of powers conferred by the articles of association or other document regulating the company or any other company.

(2) Sections 838 to 840 (rights and powers to be taken into account) apply in relation to the determination for the purposes of this Chapter whether a person has control of a company.

“Major interest”

837

(1) For the purposes of this Chapter, a person has a “major interest” in a company if—

(a) the person and one other person together have control of that company, and

(b) the rights and powers by means of which they have such control represent, in the case of each of them, at least 40% of the total.

(2) The reference in subsection (1)(a) to two persons together having control of a company is to two persons who, taken together, have the power mentioned in section 836.

(3) Sections 838 to 840 (rights and powers to be taken into account) apply in relation to the determination for the purposes of this Chapter whether a person has a major interest in a company.

Rights and powers to be taken into account

General rule

838

(1) This section provides for a person (“A”) to be treated as having rights and powers where A's rights or powers are relevant in determining if a person—

(a) has control of a company, or

(b) has a major interest in a company.

(2) A is treated as having rights and powers that A—

(a) is entitled to acquire at a future date, or

(b) will, at a future date, become entitled to acquire.

(3) A is treated as having rights and powers of other persons, so far as they are required or may be required to be exercised in any one or more of the following ways—

(a) on A's behalf,

(b) under A's direction, or

(4) A is treated as having rights and powers of a person connected with A (see section 842).

(5) A is treated as having rights and powers that a person connected with A would be treated as having if that person were a person whose rights or powers are relevant in determining if a person has control of or a major interest in a company.

(6) For the purposes of subsections (3) to (5), a person is treated as having rights or powers that the person—

(a) is entitled to acquire at a future date, or

(b) will, at a future date, become entitled to acquire.

(7) Subsection (3) does not apply to rights and powers conferred in relation to property of a borrower by the terms of any security relating to the borrower's loan.

Rights and powers held jointly

839

(1) References in this Chapter—

(a) to rights and powers of a person, or

(b) to rights and powers that a person is or will become entitled to acquire,

include rights or powers that are exercisable by that person, or when acquired will be exercisable by that person, only jointly with one or more other persons.

(2) Subsection (1) is subject to section 840 (partnerships).

Partnerships

840

(1) The rights and powers of a person as a member of a firm are ignored unless the person has control of or a major interest in the firm.

(2) Whether a person has control of or a major interest in a firm is determined in accordance with sections 836 to 839 as in relation to a company.

(3) For the purposes of subsection (2), references in those sections to any other company must be read as including any other firm.

Meaning of “participator” and “associate”

“Participator” and “associate”

841

(1) In this Chapter “participator”, in relation to a close company, has the meaning given by section 454 of CTA 2010, except as provided in subsection (2).

(2) “Participator” does not include a person just because the person is a loan creditor of the company within the meaning given by section 453 of CTA 2010.

(3) In this Chapter “associate”, in relation to a participator in a close company, has the meaning given by section 448 of CTA 2010.

Connected persons

Introduction

842

(1) Section 843 explains what is meant in this Chapter when a person is referred to as being connected with another person.

(2) If that section provides that one person (“A”) is connected with another person (“B”), B is connected with A too.

(3) In that section—

“relative” means brother, sister, ancestor or lineal descendant, and

“settlement” and “settlor” have the same meaning as in Chapter 5 of Part 5 of ITTOIA (see section 620 of that Act).

Who are connected persons

843

(1) An individual (“A”) is connected with another individual (“B”) if—

(a) A is B's spouse or civil partner,

(b) A is a relative of B,

(d) A is a relative of B's spouse or civil partner, or

(e) A is the spouse or civil partner of a relative of B's spouse or civil partner.

(2) A person in the capacity of a trustee of a settlement is connected with—

(a) any individual who is a settlor in relation to the settlement,

(b) any person connected with such an individual, and

(3) For the purposes of subsection (2) a body corporate is connected with a settlement if—

(a) it is a close company (or not a close company only because it is not UK resident) and the participators include the trustees of the settlement, or

(b) it is controlled by a company within paragraph (a).

(4) A person is connected with a company if they are related parties because of section 835(2) or (3).

(5) For the purposes of subsection (4) and for the purposes of section 835 as it applies for the purposes of subsection (4)—

(a) “company” includes any body corporate or unincorporated association, but does not include a firm, and

(b) a unit trust scheme is treated as if it were a company and as if the rights of the unit holders were shares in the company.

Introductory

Overview of Chapter

844

(1) This Chapter sets out special rules relating to transactions between related parties.

(2) Sections 845 to 849A are about the rule that transfers between a company and a related party are treated as being at market value.

(2ZA) Sections 849AB to 849AD make provision for the grant of a licence or other right by a company to a related party, or vice versa, to be treated as being at market value.

(2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Sections 850 and 851 set out other rules for transactions involving related parties.

(4) See Chapter 12 for the meaning of “related parties”.

Transfers treated as being at market value

845

(1) The basic rule is that a transfer of an intangible asset—

(a) from a company to a related party, or

(b) to a company from a related party,

is treated for all purposes of the Taxes Acts as being at market value (as respects both the company and the related party) if condition A or B is met.

(2) Condition A is that the asset is a chargeable intangible asset in relation to the transferor immediately before the transfer.

(3) Condition B is that the asset is a chargeable intangible asset in relation to the transferee immediately after the transfer.

(4) That rule is subject to—

(a) section 846 (transfers not at arm's length),

(b) section 847 (transfers involving other taxes),

(ca) section 848A (assets held for purposes of exempt foreign permanent establishments), ...

(d) section 849 (transfers involving gifts of business assets), ...

(e) section 849A (disincorporation relief: transfer values for post-FA 2002 goodwill) , and

(f) sections 900E and 900F (special rules in respect of assets that were pre-FA 2002 assets etc).

(4A) References in subsection (1) to a related party in relation to a company are to be read as including references to a person in circumstances where the participation condition is met as between that person and the company.

(4B) References in subsection (4A) to a company include a firm in a case where, for section 1259 purposes, references in subsection (1) to a company are read as references to the firm.

(4C) Section 148 of TIOPA 2010 (when the participation condition is met) applies for the purposes of subsection (4A) as it applies for the purposes of section 147(1)(b) of TIOPA 2010.

(4D) Subsection (4E) applies where—

(a) a gain on the disposal of an intangible asset by a firm is a gain to be taken into account for section 1259 purposes, and

(b) for those purposes, references in subsection (1) to a company are read as references to the firm.

(4E) Where this subsection applies, the gain referred to in subsection (4D)(a) is to be treated for the purposes of this section as if it were a chargeable realisation gain for the purposes of section 741(1) (meaning of “chargeable intangible asset”).

(4F) In this section, “section 1259 purposes” means the purposes of determining under section 1259 the amount of profits or losses to be allocated to a partner in a firm.

(5) In subsection (1)—

“market value” means the price the asset might reasonably be expected to fetch on a sale in the open market, and

“the Taxes Acts” means the enactments relating to income tax, corporation tax or chargeable gains.

Transfers not at arm’s length

846

(1) Section 845 does not apply if the consideration for the transfer—

(a) falls to be adjusted for tax purposes under Part 4 of TIOPA 2010 (provision not at arm's length), or

(b) falls within that Part without falling to be so adjusted.

(1A) Subsection (1B) applies in relation to the transfer of an intangible asset where—

(a) by virtue of subsection (1), section 845 does not apply, and

(b) the market value of the asset is greater than the Part 4 TIOPA amount.

(1B) An amount equal to the market value of the asset less the Part 4 TIOPA amount is to be brought into account for the purposes of corporation tax in relation to the transfer (in addition to the Part 4 TIOPA amount).

(1C) In subsections (1A) and (1B)—

“market value”, in relation to an asset, has the meaning given in section 845(5);

“Part 4 TIOPA amount” means the amount which, following the application of Part 4 of TIOPA 2010 in relation to the consideration for the transfer, is brought into account in respect of the consideration for the purposes of corporation tax.

(2) For the purposes of subsection (1)(b) the consideration for a transfer falls within that Part without falling to be adjusted under it if—

(a) the condition in section 147(1)(a) of TIOPA 2010 is met,

(aa) the participation condition is met (see subsection (2A)), and

(b) the actual provision does not differ from the arm's length provision.

(2A) Section 148 of TIOPA 2010 (when the participation condition is met) applies for the purposes of subsection (2)(aa) as it applies for the purposes of section 147(1)(b) of TIOPA 2010.

(3) In subsection (2) “the actual provision” and “the arm's length provision” have the same meaning as in that Part (see, respectively, sections 149 and 151 of TIOPA 2010).

Transfers involving other taxes

847

(1) This section applies if—

(a) in a case where section 845(1) applies and the asset is transferred from the company to a related party, the transfer is at less than its market value,

(b) in a case where that section applies and the asset is transferred to the company from the related party, the transfer is at more than its market value, and

(2) Condition A is that the related party—

(a) is not a company, or

(b) is a company in relation to which the asset is not a chargeable intangible asset immediately after the transfer to it or, as the case may be, immediately before the transfer from it.

(3) Condition B is that the transfer—

(a) gives rise to an amount to be taken into account in calculating any person's income, profits or losses for tax purposes because of a relevant provision, or

(b) would do so apart from section 845(1).

(4) If this section applies, section 845(1) does not apply in relation to the calculation referred to in subsection (3) for the purposes of any relevant provision.

(5) In this section “relevant provision” means—

(a) Chapter 2 of Part 23 of CTA 2010 (matters which are distributions), except section 1000(2), and

(b) Part 3 of ITEPA 2003 (employment income: earnings and benefits etc treated as earnings).

Tax-neutral transfers

848

(1) Section 845 does not apply if the transfer is tax-neutral for the purposes of this Part as a result of any provision in this Part.

(2) For such provisions, see, in particular—

(a) section 775 (transfers within a group), and

(b) sections 818 to 826 (transfer of business or trade).

Transfers involving gifts of business assets

849

(1) This section applies if—

(a) the asset is transferred to the company mentioned in section 845(1), and

(b) on a claim for relief under section 165 of TCGA 1992 (relief for gifts of business assets) in respect of the transfer, a reduction is made under section 165(4)(a).

(2) The transfer is treated for the purposes of this Part as being at market value, less the amount of the reduction.

(3) Any necessary adjustments may be made, by way of assessment, amendment of returns or otherwise, regardless of any relevant time limits.

Other rules

850

(1) Chapter 7 (roll-over relief in case of realisation and reinvestment) does not apply in relation to the part realisation by a company of an intangible fixed asset if there is a related party acquisition as a result of, or in connection with, the part realisation.

(2) For this purpose there is a related party acquisition if a person who is a related party in relation to the company acquires an interest of any description—

(a) in the intangible fixed asset, or

(b) in an asset whose value is derived in whole or in part from that asset.

851

(1) This section applies if—

(a) a royalty is payable by a company to or for the benefit of a related party,

(b) the royalty is not paid in full within the period of 12 months after the end of the period of account in which a debit in respect of it is recognised by the company for accounting purposes, and

(c) credits representing the full amount of the royalty are not brought into account under this Part in any accounting period by the person to whom it is payable.

(2) The royalty is brought into account for the purposes of this Part only when it is paid.

Chapter 14 — Miscellaneous provisions

Grants and other contributions to expenditure

Treatment of grants and other contributions to expenditure

852

(1) This section applies if a grant or other payment is intended by the payer to meet, directly or indirectly, expenditure of a company on an intangible fixed asset.

(2) A gain recognised in the company's profit and loss account in respect of the grant or other payment is treated for the purposes of section 721 (receipts recognised as they accrue) as a gain representing a receipt in respect of the intangible fixed asset.

(3) This section does not apply to a grant within section 853.

Grants to be left out of account for tax purposes

853

(1) This section applies to the following grants (“exempt grants”)—

(a) grants under Part 2 of the Industrial Development Act 1982 (c. 52) (regional development grants), and

(b) grants made under Northern Ireland legislation and declared by the Treasury by order to correspond to a grant under that Part.

(2) A gain in respect of an exempt grant to a company is ignored for the purposes of this Part, even though it is recognised in determining the company's profit or loss.

(3) This subsection applies if, as a result of an exempt grant being brought into account by the company to which it is made, there is a reduction—

(a) in the amount of a loss recognised in determining the company's profit or loss, or

(b) in the amount of expenditure on an intangible fixed asset that is capitalised for accounting purposes.

(4) If subsection (3) applies, the amount of the reduction is added back for the purposes of this Part.

Finance leasing

Finance leasing etc

854

(1) The Treasury may make provision by regulations as to the application of this Part in relation to a company that is the finance lessor of an intangible asset that is the subject of a finance lease.

(2) Section 855 is about the provision that the regulations may make.

(3) References in this section and that section to a finance lease—

(a) have the meaning they have for accounting purposes, and

(b) include hire-purchase, conditional sale or other arrangements if they are of a similar character to a finance lease.

(4) References to the finance lessor or finance lessee have a corresponding meaning.

(5) Regulations under this section may be made so as to have effect from 1 April 2002.

Further provision about regulations under section 854

855

(1) Regulations under section 854 may provide that this Part applies as if the asset were an intangible fixed asset of the finance lessor and not a financial asset, even though the asset is accounted for by the finance lessor as a financial asset.

(2) The regulations may provide that this Part applies as if the amount at which the asset is recognised in the finance lessor's balance sheet were capitalised expenditure on an intangible fixed asset, but that—

(a) no election may be made under section 730 (writing down at fixed rate: election for fixed-rate basis) in respect of that amount, and

(b) that amount is not to be treated as capitalised expenditure for the purposes of section 756(2) (roll-over relief in case of realisation and reinvestment: conditions to be met in relation to expenditure on other assets).

(3) The regulations may provide that if an asset formerly recognised by the finance lessor for accounting purposes as an intangible fixed asset becomes subject to a finance lease (and so comes to be accounted for as a financial asset), the value of the asset so created is recognised as realisation proceeds of the intangible fixed asset on the change of accounting treatment.

(4) The regulations may provide that assets partially excluded from this Part by sections 810 to 813 ... (assets excluded except as respects royalties) are entirely excluded from this Part as respects the finance lessor if they—

(a) are subject to a finance lease, and

(b) are accounted for by the finance lessor as financial assets.

(5) The regulations may provide for excluding from the regulations assets used by the finance lessee for the purposes of a trade or business in respect of which the finance lessee is liable to income tax.

(6) The regulations may provide that an intangible asset counts as a pre-FA 2002 asset in the hands of the finance lessor if the finance lessee is—

(a) a company for which the asset was the whole or part of a pre-FA 2002 asset, or

(b) a person who is a related party in relation to such a company.

(7) The regulations may make incidental, supplemental, consequential and transitional provision and savings.

(8) That provision may include modifications of the operation of other provisions of the Corporation Tax Acts.

Values to be used in special cases

Assets acquired or realised together

856

(1) Any reference in this Part to the acquisition or realisation of an asset includes a reference to the acquisition or realisation of that asset together with other assets.

(2) For the purposes of this Part assets acquired or realised as a result of one bargain are treated as acquired or realised together even though—

(a) separate prices are, or purport to be, agreed for separate assets, or

(b) there are, or purport to be, separate acquisitions or realisations of separate assets.

(3) If assets are acquired together, any values allocated to particular assets by the company in accordance with generally accepted accounting practice must be accepted for the purposes of this Part.

(4) If no such values are so allocated, so much of the expenditure as on a just and reasonable apportionment is properly attributable to each asset is treated for the purposes of this Part as referable to that asset.

(5) If assets are realised together, so much of the proceeds of realisation as on a just and reasonable apportionment is properly attributable to each asset is treated for the purposes of this Part as proceeds of the realisation of that asset.

Deemed market value acquisition: adjustment where nil accounting value

857

(1) This section applies if—

(a) a company is treated for the purposes of this Part as acquiring an asset at market value, but

(b) the accounting value of the asset transferred is nil in the hands of the transferee.

(2) In such a case any reference in this Part to—

(a) the cost of the asset recognised for accounting purposes,

(b) the accounting value of the asset, or

is a reference to the cost, value or loss that would have been recognised if the asset had been acquired at market value.

(3) If the asset is revalued, the revaluation is ignored.

(4) In this section “revaluation” has the same meaning as in section 723 (see subsection (5) of that section) and “revalued” must be read accordingly.

...

Fungible assets

858

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Assets ceasing to be or becoming chargeable intangible assets

Asset ceasing to be chargeable intangible asset: deemed realisation at market value

859

(1) If an asset ceases to be a chargeable intangible asset in relation to a company in any of the circumstances specified in subsection (2), this Part applies as if—

(a) immediately before the asset ceased to be a chargeable intangible asset in relation to the company, the company had realised the asset for its market value at that time, and

(b) the company had immediately reacquired it at that value.

(2) The circumstances are—

(a) that the company ceases to be UK resident,

(b) in the case of a company that is not UK resident, any circumstances not involving the realisation of the asset by the company, and

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Asset ceasing to be chargeable intangible asset: postponement of gain

860

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of postponed gain on subsequent realisation

861

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of postponed gain in other cases

862

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Asset becoming chargeable intangible asset

863

(1) This section applies if an asset becomes a chargeable intangible asset in relation to a company—

(a) on the company becoming UK resident,

(b) in the case of a company that is not UK resident, on the asset beginning to be held—

(i) for the purposes of a trade carried on by the company in the United Kingdom through a permanent establishment,

(ii) for the purposes of a trade carried on by the company of dealing in or developing UK land,

(iii) for the purposes of a UK property business carried on by the company, or

(iv) for the purposes of enabling the company to generate other UK property income (within the meaning given by section 5(6)), or

(2) This Part applies as if—

(a) the company had acquired the asset immediately after it became a chargeable intangible asset in relation to the company, and

(b) had done so for its accounting value at that time.

(3) But subsection (2)(b) is subject to section 863A.

Matters to be ignored

Tax avoidance arrangements to be ignored

864

(1) In determining whether a credit or a debit is to be brought into account under this Part and, if so, its amount, any tax avoidance arrangements are ignored.

(2) Arrangements are “tax avoidance arrangements” for this purpose if their main object or one of their main objects is to enable a company—

(a) to obtain a debit under this Part to which it would not otherwise be entitled,

(b) to obtain a debit under this Part which exceeds that to which it would otherwise be entitled,

(d) to reduce the amount of any such credit.

(3) In this section—

“arrangements” includes any scheme, agreement or understanding, whether or not it is legally enforceable, and

“brought into account” means brought into account for tax purposes.

Debits for expenditure not generally deductible for tax purposes

865

(1) No debit may be brought into account for tax purposes under this Part in respect of expenditure that is not generally deductible for tax purposes.

(2) Expenditure is “not generally deductible for tax purposes” so far as revenue expenditure of that description incurred for the purposes of a trade would be non-deductible because of a provision specified in subsection (3).

(3) Those provisions are—

(a) section 56 (car ... hire),

(b) section 1298 (business entertainment and gifts),

(d) section 246(2) of FA 2004 (expenditure on benefits under employer-financed retirement benefits schemes).

Delayed payments and bad debts

Delayed payment of employees' remuneration

866

(1) This subsection applies if—

(a) a debit in respect of employees' remuneration is recognised by a company for accounting purposes, and

(b) apart from this section, a debit in respect of the remuneration could be brought into account for the purposes of this Part for the period of account in which the debit is recognised.

(2) No such debit may be so brought into account unless the remuneration is paid before the end of the period of 9 months beginning with the end of the period of account.

(3) If the remuneration is paid after the end of the 9 month period, the debit may be brought into account for the purposes of this Part for the period of account in which it is paid.

(4) Section 867 makes further provision relating to the application of this section.

Provisions supplementing section 866

867

(1) For the purposes of section 866 a debit in respect of employees' remuneration recognised for accounting purposes includes an amount reserved in the accounts of an employer with a view to its becoming employees' remuneration.

(2) For the purposes of section 866 it does not matter if the debit is in respect of—

(a) particular employments, or

(b) employments generally.

(3) Any adjustment required by section 866 of an accounting debit that is partly referable to an amount to which that section applies and partly to other matters must be made on a just and reasonable basis.

(4) In making a calculation for tax purposes that has to be made before the end of the 9 month period mentioned in section 866(2), it must be assumed that any remuneration which is unpaid when the calculation is made will not be paid before the end of that period.

(5) But if the remuneration is subsequently paid before the end of the period, nothing in subsection (4) prevents the calculation being revised and any tax return being amended accordingly.

(6) For the purposes of section 866 and this section, remuneration is paid when it—

(a) is treated as received by an employee for the purposes of ITEPA 2003 by section 18 or 19 of that Act (receipt of money and non-money earnings), or

(b) would be so treated if it were not exempt income.

(7) In section 866 and this section—

“employee” includes an office-holder and so “employment” includes an office, and

“remuneration” means an amount which is or is treated as earnings for the purposes of ITEPA 2003.

Delayed payment of pension contributions

868

(1) This section applies if—

(a) a debit in respect of pension contributions is recognised by a company for accounting purposes, and

(b) the contributions are not paid until after the end of the period of account in which the debit is recognised.

(2) The contributions may be brought into account for the purposes of this Part only when they are paid.

(3) For the purposes of this section “pension contributions” means—

(a) sums paid by an employer by way of contributions under a registered pension scheme,

(b) sums paid to the trustees or managers of such a scheme that are treated as if they were the payment of contributions under the pension scheme (see section 199 of FA 2004), or

(c) expenses within section 246(3) of FA 2004 (expenditure on benefits under employer-financed retirement benefits schemes).

(4) Any adjustment required by this section of an accounting debit that is partly referable to an amount to which this section applies and partly to other matters must be made on a just and reasonable basis.

Bad debts etc

869

(1) No debit may be brought into account for the purposes of this Part in respect of a debt owed to the company, except—

(a) by way of impairment loss, or

(b) so far as the debt is released as part of a statutory insolvency arrangement.

(2) If a debt is so released, any gain in respect of the release that is brought into account for accounting purposes by the debtor is disregarded for the purposes of this Part.

(3) Any other gain in respect of an unpaid debt in respect of an intangible fixed asset that is brought into account by the debtor for accounting purposes is treated for the purposes of section 721 (receipts recognised as they accrue) as a gain in respect of an intangible fixed asset.

(4) Any adjustment required by this section of an accounting gain or loss that is partly referable to an amount affected by this section and partly to other matters must be made on a just and reasonable basis.

(5) In this section “debt” includes an obligation or liability that falls to be discharged otherwise than by the payment of money.

...

Assumptions for calculating chargeable profits

870

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 15 — Adjustments on change of accounting policy

Introductory

Introduction to Chapter

871

(1) This Chapter applies if—

(a) there is a change of accounting policy in drawing up a company's accounts from one period of account to the next, and

(b) the approach in each of those periods accords with the law and practice applicable in relation to that period.

(2) In this Chapter—

(a) the first of those periods of account is referred to as “the earlier period”, and

(b) the next is referred to as “the later period”.

(3) This Chapter applies, in particular, if—

(a) the company prepares accounts for the earlier period in accordance with UK generally accepted accounting practice and for the later period in accordance with international accounting standards, or

(b) the company prepares accounts for the earlier period in accordance with international accounting standards and for the later period in accordance with UK generally accepted accounting practice.

Change of policy involving change of value

Adjustments in respect of change

872

(1) This section and section 873 apply if—

(a) as a result of the change of accounting policy there is a difference (“the accounting difference”) between—

(i) the accounting value of an intangible fixed asset of the company at the end of the earlier period, and

(ii) the accounting value of that asset at the beginning of the later period, and

(b) no election has been made in respect of the asset under section 730 (writing down at fixed rate: election for fixed-rate basis).

(2) If there is an increase in that value, a corresponding credit must be brought into account for tax purposes in the later period.

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Corporation Tax Act 2009

Recovery of charge from another group company or controlling director

795

Interpretation of section 795

796

Recovery under section 795: procedure etc

797

Recovery under section 795: time limit

798

Disregard of payments between group members for reliefs

Disregard of payments between group members for reliefs

799

Chapter 10 — Excluded assets

Introductory

Introduction

800

Right to dispose of or acquire excluded asset also excluded

801

Effect of partial exclusion

802

Assets wholly excluded from this Part

Non-commercial purposes etc

803

Assets for which capital allowances previously made

804

Rights over tangible assets

805

Financial assets

806

Rights in companies, trusts etc

807

Assets representing production expenditure on films

807A

Oil licences

809

Assets excluded from this Part except as respects royalties

Mutual trade or business

810

Sound recordings

811

Master versions of films

812

Computer software treated as part of cost of related hardware

813

Assets excluded from this Part to the extent specified

Research and development

814

Election to exclude capital expenditure on software

815

Further provision about elections under section 815

816

Chapter 11 — Transfer of business or trade

Introduction

Overview of Chapter

817

Tax-neutral transfers

Company reconstruction involving transfer of business

818

European cross-border transfers of business: introduction

819

Transfer of assets on European cross-border transfer of business

820

European cross-border mergers: introduction

821

Transfer of assets on European cross-border merger

822

Interpretation of sections 821 and 822

823

Transfer of business of building society to company

824

Application of sections 780 and 785 where transfer within section 824 occurs

825

Amalgamation of, or transfer of engagements by, certain societies

826

Transfer of assets to non-UK resident company

Claims to postpone charge on transfer

827

Relief on transfer

828

Charge on subsequent realisations