Finance (No. 2) Act 2005

41 Intangible fixed assets U.K.

(1) Schedule 29 to FA 2002 (gains and losses of a company from intangible fixed assets) is amended as set out in subsections (2) to (4).

(2) In paragraph 92 (transfer between company and related party treated as being at market value)—

(a) in sub-paragraph (1), for “the following two exceptions” substitute “ the following four exceptions ”;

(b) after sub-paragraph (4) insert—

“(4A) The third exception is where—

(a) the asset is transferred from the company at less than its market value, or to the company at more than its market value,

(b) the related party—

(i) is not a company, or

(ii) is a company in relation to which the asset is not a chargeable intangible asset immediately after the transfer to it or (as the case may be) immediately before the transfer from it,

and

(c) by virtue of any provision of—

(i) section 209 of the Taxes Act 1988 (meaning of “distribution”), or

(ii) Part 3 of the Income Tax (Earnings and Pensions) Act 2003 (employment income: earnings and benefits etc treated as earnings),

the transfer gives rise (or would give rise but for sub-paragraph (1)) to an amount to be taken into account in computing any person's income, profits or losses for tax purposes.

(4B) Where the third exception applies, sub-paragraph (1) does not apply, in relation to the computation mentioned in sub-paragraph (4A)(c), for the purposes of any such provision as is mentioned there.

(4C) The fourth exception is where—

(a) the asset is transferred to the company, and

(b) on a claim for relief under section 165 of the Taxation of Chargeable Gains Act 1992 (relief for gifts of business assets) in respect of the transfer, a reduction is made under subsection (4)(a) of that section.

(4D) Where the fourth exception applies—

(a) the transfer is treated for the purposes of this Schedule as being at market value less the amount of the reduction;

(b) all such adjustments as may be required, by way of assessment, amendment of returns or otherwise, may be made (notwithstanding any time limit on the making of an assessment or the amendment of a return).”.

(3) In paragraph 95 (meaning of “related party”) for Case Three substitute— “Case Three C is a close company and P is, or is an associate of—

(a) a participator in C, or

(b) a participator in a company that has control of, or holds a major interest in, C.”.

(4) In paragraph 132 (roll-over relief: transitory interaction with relief on replacement of business asset), in sub-paragraph (5) (disapplication for certain corporation tax purposes of Classes 4 to 7 in section 155 of TCGA 1992)—

(a) for “4 to 7” substitute “ 4 to 7A ”;

(b) for “(goodwill and various types of quota)” substitute “ (goodwill and certain other intangible assets) ”.

(5) In section 86(2) of FA 1993 (roll-over relief: power to amend section 155 of TCGA 1992 by order) for the words after “may make such consequential amendments” substitute “of—

(a) Schedule 7AB to the Taxation of Chargeable Gains Act 1992, or

(b) paragraph 132 of Schedule 29 to the Finance Act 2002,

as appear to the Treasury to be appropriate. ”.

(6) The amendments made by subsection (2) have effect in relation to any transfer of an asset made on or after 16th March 2005.

(7) The amendment made by subsection (3) has effect, for the purposes of paragraph 92 of Schedule 29 to FA 2002 as it applies otherwise than for determining the debits or credits to be brought into account under that Schedule, in relation to any transfer of an asset made on or after 16th March 2005.

(8) That amendment has effect, for all other purposes of that Schedule, in relation to the debits or credits to be brought into account for accounting periods beginning on or after 16th March 2005 (and, in relation to the debits or credits to be brought into account for any such period, shall be deemed always to have had effect).

(9) An accounting period beginning before, and ending on or after, that date is treated for the purposes of subsection (8) as if so much of that period as falls before that date, and so much of that period as falls on or after that date, were separate accounting periods.

(10) The amendments made by subsection (4) have effect in relation to any such acquisition as is referred to in paragraph 132(5) of Schedule 29 to FA 2002 made on or after 22nd March 2005.