CIRD20040 - Reinvestment relief: general matters and conditions to be satisfied: by asset realised: chargeable intangible asset requirement: telecommunications assets and Lloyd’s syndicate capacity
FA02/SCH29/PARA128 (3) and 129 (4)
Background
As explained in CIRD11740 and CIRD11750, the time test (which partly determines whether an intangible asset comes within Schedule 29 - see CIRD11500) is relaxed for:
- syndicate capacity enabling a company to write insurance business at Lloyd’s, and
- telecommunications rights and licences within FA00/SCH23.
These assets come within Schedule 29 even though they may have
been acquired prior to a company’s first accounting period to
which the rules in Schedule 29 apply.
The combination of this relaxation, and the requirement for
reinvestment relief that the asset realised must have been a
chargeable intangible asset
throughout the period it was held (see
CIRD20035), would have inhibited
reinvestment relief on the realisation of assets of this kind
acquired prior to the first accounting period mentioned above.
This is because an asset is only a chargeable intangible
asset at a particular time if a gain on its disposal would create a
taxable credit within Part 4 of Schedule 29 (see CIRD20035). But no
such taxable credit would arise on a hypothetical realisation prior
to the first accounting period for which the rules in Schedule 29
apply.
So, without special provision, reinvestment relief would
either be unavailable or would be restricted in the way described
in CIRD20035, in spite of the fact that gains on the disposal of
these assets would have been taxed as income under the legislation
which Schedule 29 supersedes.
Legislative provision
To avoid this consequence, Schedule 29 provides that syndicate capacity and licences or rights within FA00/SCH23, acquired prior to the first accounting period of a company for which the rules in Schedule 29 apply to that company, are to be regarded as ‘chargeable intangible assets’ from acquisition to the beginning of that accounting period. See also CIRD70710.
