Finance Act 2002

[F1 85B (1) This paragraph applies in relation to a transfer of a business, or a part of a business, where— U.K.

(a) the transfer is of a kind [F2 mentioned in paragraph 85(1) or (1A) (or which would be of such a kind] if the business, or the part of the business, transferred were carried on by the transferor in the United Kingdom), and

(b) the transferor is a transparent entity.

(2) Where this paragraph applies paragraph [F3 85] does not apply in relation to the transfer.

(3) If, as a result of a transfer to which this paragraph applies, a transfer profit would, but for the Mergers Directive, have been chargeable to tax under the law of a member State other than the United Kingdom, Part 18 of the Taxes Act 1988 (double taxation relief), including any arrangements having effect by virtue of section 788 of that Act (bilateral relief), shall apply as if that tax, calculated in accordance with sub-paragraph (5), had been chargeable.

(4) In sub-paragraph (3) “transfer profit” means a profit which would be treated as accruing to a transparent entity in respect of an intangible fixed asset were it not transparent, by reason of the transfer of [F4 intangible fixed assets] by the transparent entity.

(5) Tax is calculated in accordance with this sub-paragraph if—

(a) so far as permitted under the law of the relevant member State, losses arising on the transfer [F5 of those intangible fixed assets] are set against profits arising on the transfer [F5 of those intangible fixed assets], and

(b) any relief available under that law has been claimed.]

Textual Amendments

F1 Sch. 29 paras. 85B-85D and cross-heading inserted (with effect in accordance with reg. 3(3) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 3 para. 5

F2 Words in Sch. 29 para. 85B(1)(a) substituted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), Sch. 3 para. 13(2)

F3 Word in Sch. 29 para. 85B(2) substituted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), Sch. 3 para. 13(3)

F4 Words in Sch. 29 para. 85B(4) substituted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), Sch. 3 para. 13(4)

F5 Words in Sch. 29 para. 85B(5)(a) inserted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), Sch. 3 para. 13(5)

Modifications etc. (not altering text)

C1 Sch. 29 paras. 85B-85D modification to earlier affecting provision S.I. 2007/3186, reg. 3(3) (8.7.2008) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), regs. 1(2), 4(2)