Corporation Tax Act 2009

Chapter 2 U.K. Disposals of know-how

908 Charge to tax on profits from disposals of know-how U.K.

(1) The charge to corporation tax on income applies to profits arising where consideration is received by a company—

(a) for the disposal of know-how, or

(b) for giving, or wholly or partly fulfilling, an undertaking which—

(i) is given in connection with a disposal of know-how, and

(ii) restricts or is designed to restrict any person's activities in any way.

(2) For the purposes of subsection (1)(b), it does not matter whether or not the undertaking is legally enforceable.

(3) Subsection (1) is subject to the exceptions in section 909.

(4) In this Chapter “know-how” means any industrial information or techniques likely to assist in—

(a) manufacturing or processing goods or materials,

(b) working a source of mineral deposits (including searching for, discovering or testing mineral deposits or obtaining access to them), or

(c) carrying out any agricultural, forestry or fishing operations.

(5) In subsection (4)—

(a) “mineral deposits” includes any natural deposits capable of being lifted or extracted from the earth and for this purpose geothermal energy is treated as a natural deposit, and

(b) “source of mineral deposits” includes a mine, an oil well and a source of geothermal energy.

909 Exceptions to charge under section 908 U.K.

(1) Section 908 does not apply in the following cases.

(2) Case A is if the consideration is brought into account under section 462 of CAA 2001 (disposal values).

(3) Case B is if the consideration is dealt with in relation to the company receiving it as a trading receipt under section 177(2) (disposal of know-how if trade continues to be carried on).

(4) Case C is if the consideration is dealt with in relation to the person receiving it as a capital receipt for goodwill under section 178(2) (disposal of know-how as part of disposal of all or part of a trade).

(5) Case D is if the disposal of the know-how is by way of a sale and—

(a) the buyer is a body of persons over which the seller has control,

(b) the seller is a body of persons over which the buyer has control, or

(c) the buyer and the seller are both bodies of persons and another person has control over both of them.

(6) In subsection (5) “body of persons” includes a firm.

910 Profits charged under section 908 U.K.

(1) The profits charged under section 908 are—

(a) the amount of the consideration, less

(b) any expenditure incurred by the company wholly and exclusively in the acquisition or disposal of the know-how.

(2) Such expenditure may not be taken into account more than once, whether under this section or otherwise.

(3) This section needs to be read with section 926 (contributions to expenditure).