In order to quantify the loss eligible for relief, the foreign
loss is to be recomputed in accordance with UK principles, (
CTM81560).
To enable the recomputation to be carried out, the extended
rules require assumptions to be made about the surrendering
company. One of those assumptions relates to intangible assets held
by the surrendering company.
In the following paragraphs a reference to a ‘loss
period’ is to be read as a reference to the period defined by
the rules of the relevant European Economic Area (EEA) territory
for which the EEA tax loss is computed. This could be an accounting
period, a tax return period or some other period where these are
coincident.
On the assumption that the company becomes resident in the UK
from the beginning of the loss period the provisions in
FA02/SCH29/PARA110 (CIRD47020) determine when an asset held by the
company becomes a chargeable intangible asset. Paragraph 110 has
the effect of treating the asset as being acquired by the company
immediately after it became a chargeable intangible asset for its
accounting value at that time. The accounting value of the asset
should be determined on the basis that UK GAAP has applied
throughout the lifetime of the asset, or where the company uses
International Accounting Standards, that FA02/SCH29/PARA13 applied
on transition to the International Accounting Standards.
