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Notices of Amendments: 3 January 2019                  

22

 

Finance (No. 3) Bill, continued

 
 

(a)    

a statement of the circumstances (in relation to negotiations relating to

 

the United Kingdom’s withdrawal from the European Union) that give

 

rise to the need for such preparatory expenditure, and

 

(b)    

an estimate of the expenditure to be incurred.

 

(1B)    

No expenditure may be incurred under subsection (1) unless the House of

 

Commons comes to a resolution that it has considered the statement and estimate

 

under subsection (1A) and approves the proposed expenditure.”

 


 

The Chancellor of the Exchequer

 

NS1

 

To move the following Schedule—

 

“Intangible fixed assets: restrictions on goodwill and certain other assets

 

1          

Part 8 of CTA 2009 (intangible fixed assets) is amended as follows.

 

2          

In section 711 (overview of Part) in subsection (8) after paragraph (f) (but

 

before the following “and”) insert—

 

“(fa)    

Chapter 15A (debits in respect of goodwill and certain other

 

assets),”.

 

3          

In section 715 (application of Part to goodwill) in subsection (2) for the words

 

from “section 816A” to the end substitute “Chapter 15A (debits in respect of

 

goodwill and certain other assets)).”

 

4          

In section 746 (“non-trading credits” and “non-trading debits”) in subsection

 

(2) for paragraph (ba) substitute—

 

“(ba)    

sections 879C(3), 879I(3), 879K(5) and 879O(3)(b) (debits in

 

respect of goodwill and certain other assets treated as non-

 

trading debits),”.

 

5          

Omit section 816A (restrictions on goodwill and certain other assets).

 

6          

After section 879 insert—

 

“Chapter 15A

 

Debits in respect of goodwill and certain other assets

 

Introduction

 

879A  

Introduction

 

(1)    

This Chapter contains special rules about the debits to be brought into

 

account by a company for tax purposes in respect of relevant assets.

 

(2)    

In this Chapter “relevant asset” means—

 

(a)    

goodwill in a business or part of a business,

 

(b)    

an intangible fixed asset that consists of information which

 

relates to customers or potential customers of a business or

 

part of a business,

 

(c)    

an intangible fixed asset that consists of a relationship

 

(whether contractual or not) between a person carrying on a

 

business and one or more customers of that business or part of

 

that business,


 
 

Notices of Amendments: 3 January 2019                  

23

 

Finance (No. 3) Bill, continued

 
 

(d)    

an unregistered trade mark or other sign used in the course of

 

a business or part of a business, or

 

(e)    

a licence or other right in respect of an asset within any of

 

paragraphs (a) to (d).

 

Requirement to write down at a fixed rate

 

879B  

Requirement to write down at a fixed rate

 

(1)    

This section applies if a company acquires or creates a relevant asset

 

on or after 1 April 2019.

 

(2)    

The company is to be treated as having made an election under section

 

730 to write down the cost of the asset for tax purposes at a fixed rate.

 

(3)    

In its application in relation to the asset, section 731 (writing down at

 

fixed rate: calculation) has effect as if in subsection (1)(a) for “4%”

 

there was substituted “6.5%”.

 

(4)    

The Treasury may by regulations amend subsection (3) so as to alter

 

the percentage substituted for 4%.

 

Restrictions on debits: pre-FA 2019 relevant assets

 

879C  

Restrictions on debits: pre-FA 2019 relevant assets

 

(1)    

This section applies in respect of a relevant asset of a company if it is

 

a pre-FA 2019 relevant asset.

 

(2)    

No debits in respect of the asset are to be brought into account by the

 

company for tax purposes under Chapter 3 (debits in respect of

 

intangible fixed assets) or Chapter 15 (adjustments on change of

 

accounting policy).

 

(3)    

Any debit in respect of the asset that is brought into account by the

 

company for tax purposes under Chapter 4 (realisation of intangible

 

fixed assets) is treated for the purposes of Chapter 6 as a non-trading

 

debit.

 

(4)    

Sections 879D to 879H set out the cases in which a relevant asset of a

 

company is a pre-FA 2019 relevant asset for the purposes of this

 

Chapter.

 

879D  

Pre-FA 2019 relevant asset: the first case

 

    

For the purposes of this Chapter a relevant asset of a company is a pre-

 

FA 2019 relevant asset if—

 

(a)    

the company acquired or created the asset during the period

 

beginning with 8 July 2015 and ending with 31 March 2019,

 

and

 

(b)    

the asset was a chargeable intangible asset in relation to the

 

company at any time during the period beginning with 29

 

October 2018 and ending with 31 March 2019.

 

879E  

Pre-FA 2019 relevant asset: the second case

 

(1)    

For the purposes of this Chapter a relevant asset of a company (“C”)

 

is a pre-FA 2019 relevant asset if—


 
 

Notices of Amendments: 3 January 2019                  

24

 

Finance (No. 3) Bill, continued

 
 

(a)    

another company acquired or created the asset during the

 

period beginning with 8 July 2015 and ending with 31 March

 

2019,

 

(b)    

it was a chargeable intangible asset in relation to that other

 

company at any time during the period beginning with 29

 

October 2018 and ending with 31 March 2019, and

 

(c)    

C acquired the asset on or after 1 April 2019 otherwise than in

 

case A or case B from a person who was a related party in

 

relation to C.

 

(2)    

Case A is where—

 

(a)    

C acquired the asset from a company that was within the

 

charge to corporation tax at the time of the acquisition, and

 

(b)    

the asset was not a pre-FA 2019 relevant asset in the hands of

 

that company immediately before the acquisition.

 

(3)    

Case B is where C acquired the asset from a person (“the

 

intermediary”) who acquired the asset on or after 1 April 2019 from a

 

third person—

 

(a)    

who was not at the time of the intermediary’s acquisition a

 

related party in relation—

 

(i)    

to the intermediary, or

 

(ii)    

if the intermediary was not a company, to a company

 

in relation to which the intermediary was a related

 

party, and

 

(b)    

who is not, at the time of the acquisition by C, a related party

 

in relation to C.

 

(4)    

References in this section to one person being (or not being) a related

 

party in relation to another person are to be read as including

 

references to the participation condition being met (or, as the case may

 

be not being met) as between those persons.

 

(5)    

References in subsection (4) to a person include a firm in a case where,

 

for section 1259 purposes, references in this section to a company are

 

read as references to the firm.

 

(6)    

In subsection (5) “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.

 

(7)    

Section 148 of TIOPA 2010 (when the participation condition is met)

 

applies for the purposes of subsection (4) as it applies for the purpose

 

of section 147(1)(b) of TIOPA 2010.

 

879F  

Pre-FA 2019 relevant asset: the third case

 

(1)    

For the purposes of this Chapter a relevant asset of a company (“C”)

 

is a pre-FA 2019 relevant asset if—

 

(a)    

the relevant asset was created on or after 29 October 2018,

 

(b)    

C acquired the relevant asset on or after 1 April 2019 from a

 

person (“the transferor”) who was a related party in relation to

 

C at the time of the acquisition,

 

(c)    

the value of the relevant asset derives in whole or in part from

 

another asset (“the other asset”), and


 
 

Notices of Amendments: 3 January 2019                  

25

 

Finance (No. 3) Bill, continued

 
 

(d)    

the other asset meets the preserved status condition (see

 

section 879G).

 

(2)    

But if only part of the value of the relevant asset derives from the other

 

asset—

 

(a)    

the relevant asset is to be treated for the purposes of this

 

Chapter as if it were two separate assets—

 

(i)    

one representing the part of the value of the relevant

 

asset that does so derive, and

 

(ii)    

the other representing the part of the value of the

 

relevant asset that does not so derive, and

 

(b)    

subsection (1) applies only in relation to the separate asset

 

representing the part of the value of the relevant asset that

 

does so derive.

 

(3)    

For the purposes of this section the cases in which the value of a

 

relevant asset may be derived from another asset include any case

 

where—

 

(a)    

assets have been merged or divided,

 

(b)    

assets have changed their nature, or

 

(c)    

rights or interests in or over assets have been created or

 

extinguished.

 

(4)    

Section 879G supplements this section.

 

879G  

The preserved status condition etc

 

(1)    

For the purposes of section 879F the other asset meets the preserved

 

status condition if subsection (2) or (3) applies.

 

(2)    

This subsection applies if the other asset—

 

(a)    

was acquired or created by a company during the period

 

beginning with 8 July 2015 and ending with 31 March 2019,

 

and

 

(b)    

was a chargeable intangible asset in the hands of that company

 

at any time during the period beginning with 29 October 2018

 

and ending with 31 March 2019 when—

 

(i)    

that company and C were related parties, or

 

(ii)    

that company and the transferor were related parties.

 

(3)    

This subsection applies if the other asset was a pre-FA 2019 relevant

 

asset in the hands of a company at any time during the period

 

beginning with 1 April 2019 and ending with the acquisition

 

mentioned in section 879F(1)(b) when—

 

(a)    

that company and C were related parties, or

 

(b)    

that company and the transferor were related parties.

 

(4)    

It does not matter for the purposes of section 879F(1)(a) who created

 

the relevant asset.

 

(5)    

Any apportionment necessary for the purposes of section 879F(2)

 

must be made on a just and reasonable basis.

 

(6)    

Section 879E(4) to (7) applies for the purposes of section 879F and

 

this section.


 
 

Notices of Amendments: 3 January 2019                  

26

 

Finance (No. 3) Bill, continued

 
 

(7)    

Expressions used in this section have the same meaning as in section

 

879F.

 

879H  

Pre-FA 2019 relevant asset: the fourth case

 

(1)    

For the purposes of this Chapter a relevant asset of a company is a pre-

 

FA 2019 relevant asset if—

 

(a)    

the company acquired the asset on or after 1 April 2019

 

directly or indirectly in consequence of, or otherwise in

 

connection with, a disposal of a relevant asset by another

 

person, and

 

(b)    

the asset disposed of would have been a pre-FA 2019 relevant

 

asset in the hands of the company had the person transferred

 

it to the company at the time of the disposal.

 

(2)    

For the purposes of this section it does not matter whether—

 

(a)    

the asset disposed of is the same asset as the acquired asset,

 

(b)    

the acquired asset is acquired at the time of the disposal, or

 

(c)    

the acquired asset is acquired by merging assets or otherwise.

 

Restrictions on debits: no business or no qualifying IP assets acquired

 

879I  

Restrictions on debits: no business or no qualifying IP assets acquired

 

(1)    

This section applies in respect of a relevant asset of a company if the

 

company acquires the asset on or after 1 April 2019 otherwise than as

 

part of the acquisition of a business.

 

(2)    

This section also applies in respect of a relevant asset of a company

 

if—

 

(a)    

the company acquires the asset on or after 1 April 2019 as part

 

of the acquisition of a business, and

 

(b)    

the company does not acquire any qualifying IP assets as part

 

of the acquisition of the business for use on a continuing basis

 

in the course of the business.

 

(3)    

No debits in respect of the asset are to be brought into account by the

 

company for tax purposes under Chapter 3 (debits in respect of

 

intangible fixed assets) or Chapter 15 (adjustments on change of

 

accounting policy).

 

(4)    

Any debit in respect of the asset that is brought into account by the

 

company for tax purposes under Chapter 4 (realisation of intangible

 

fixed assets) is treated for the purposes of Chapter 6 as a non-trading

 

debit.

 

879J  

Meaning of qualifying IP asset

 

(1)    

In section 879I “qualifying IP asset”, in relation to a company, means

 

an intangible fixed asset that meets the following two conditions.

 

(2)    

The first condition is that the asset is—

 

(a)    

a patent, registered design, copyright or design right, plant

 

breeders’ right, or right under section 7 of the Plant Varieties

 

Act 1997,

 

(b)    

a right under the law of a country or territory outside the

 

United Kingdom corresponding or similar to a right within

 

paragraph (a), or


 
 

Notices of Amendments: 3 January 2019                  

27

 

Finance (No. 3) Bill, continued

 
 

(c)    

a licence or other right in respect of anything within paragraph

 

(a) or (b).

 

(3)    

The second condition is that in the hands of the company the asset—

 

(a)    

is not to any extent excluded from this Part by Chapter 10, and

 

(b)    

is not a pre-FA 2002 asset (see section 881).

 

(4)    

The reference in subsection (2)(c) to a licence or other right does not

 

include a licence or other right that permits the use of computer

 

software but does not permit its manufacture, adaptation or supply.

 

(5)    

The Treasury may by regulations amend the meaning of qualifying IP

 

asset for the purposes of this Chapter.

 

Restrictions on debits: acquisition from individual or firm

 

879K  

Restrictions on debits: acquisition from individual or firm

 

(1)    

This section applies in respect of a relevant asset of a company if—

 

(a)    

the company acquires the asset on or after 1 April 2019

 

directly or indirectly from an individual or firm (“the

 

transferor”),

 

(b)    

the related party condition is met, and

 

(c)    

the third party acquisition condition is not met.

 

(2)    

The related party condition is met if—

 

(a)    

in a case where the transferor is an individual, the transferor is

 

a related party in relation to the company at the time of the

 

acquisition;

 

(b)    

in a case where the transferor is a firm, any individual who is

 

a member of the transferor is a related party in relation to the

 

company at that time.

 

(3)    

The third party acquisition condition is met if—

 

(a)    

in a case where the relevant asset is goodwill—

 

(i)    

the transferor acquired all or part of the relevant

 

business in one or more third party acquisitions as

 

part of which the transferor acquired goodwill, and

 

(ii)    

the relevant asset is acquired by the company as part

 

of an acquisition of all the relevant business;

 

(b)    

in a case where the relevant asset is not goodwill—

 

(i)    

the transferor acquired the relevant asset in a third

 

party acquisition, and

 

(ii)    

the relevant asset is acquired by the company as part

 

of an acquisition of all the relevant business.

 

(4)    

No debits in respect of the asset are to be brought into account by the

 

company for tax purposes under Chapter 3 (debits in respect of

 

intangible fixed assets) or Chapter 15 (adjustments on change of

 

accounting policy).

 

(5)    

Any debit in respect of the asset that is brought into account by the

 

company for tax purposes under Chapter 4 (realisation of intangible

 

fixed assets) is treated for the purposes of Chapter 6 as a non-trading

 

debit.


 
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Revised 03 January 2019