Companies that are not resident in the UK may be members of a
group for the purposes of Schedule 29. But the transfer of an asset
between a UK resident member and a non-resident member will not
satisfy the ‘chargeable intangible asset’ requirement (
CIRD40250) unless the asset is held for
the purposes of a trade carried on in the UK through a permanent
establishment in the UK by the non-resident group member. And where
both group members are not resident in the UK the asset must be
held for those purposes by both.
It may be necessary to consider the transfer pricing rules
where intra group transactions involve non-resident companies in
circumstances where tax neutral treatment is not available (see
CIRD48040).
(FA03/S153 (1) substituted the words ‘permanent
establishment’ for ‘branch or agency’ effective
for all accounting periods beginning on or after 1 January
2003.)
Goodwill and intangible assets failing the time test (
CIRD11500 onwards) in the hand of the
transferor will also fail the ‘chargeable intangible
asset’ requirement. But in those circumstances the no gain/no
loss rules in the CG code may well be in point. See CG45305.
Where an asset fails the time test in the hands of the
transferor it will continue to do so in the hands of the
transferee. This is because the asset will have been:
As explained in
CIRD40250 not all transactions
involving the realisation of a chargeable intangible asset by one
group member in favour of another involve the transfer of an asset.
In those circumstances tax neutral treatment is not available but
for the same reason the market rule in FA02/SCH29/PARA92 does not
apply to the transaction (see
CIRD45030).
In these circumstances no adjustment to the terms of the
transaction agreed by the parties will normally be necessary for
the purposes of Schedule 29.
