Important changes for companies that acquire intangible fixed assets from related parties from 1 July 2020.
It’s been announced that legislation will be introduced in Finance Bill 2020 to allow companies who acquire pre-FA 2002 intangible assets (including intellectual property such as trademarks, patents, design rights etc) from related parties on or after 1 July 2020 to be brought within Part 8 CTA 2009.
Under the current legislation, the corporation tax rules that deal with intangible assets are contained in Part 8 Corporation Tax Act 2009 (CTA 2009). The Part 8 CTA 2009 rules only apply to intangible assets that are created on or after 1 April 2002 or to intangible assets acquired from an unrelated party on or after 1 April 2002.
Intangible assets that do not meet this condition are referred to as ‘pre-FA 2002 assets’ - normally dealt with under the corporate capital gains rules within the Taxation of Chargeable Gains Act 2002 (‘TCGA 1992’) or under Part 9 of CTA 2009.
The new measures will support UK investment in intangible assets by allowing a company’s pre-FA 2002 intangible assets acquired from 1 July 2020 to be relieved and taxed under a single regime.
Transitional rules will also be introduced to counter avoidance between related parties where a pre-FA 2002 asset is acquired from a related party on or after 1 July 2020 (including a licence in respect of a pre-FA 2002).
The transitional related party rules will be extended to include related party acquisitions of assets from a person who is not a company in relation to assets created before 1 April 2002.
Further details to be published in the Finance Bill 2020.