Corporation Tax Act 2009

780 Deemed realisation and reacquisition at market value

(1) This section applies if—

(a) a company (“the transferor”) that is a member of a group (“the group”) transfers an intangible fixed asset (“the relevant asset”) to another company (“the transferee”),

(b) immediately before the transfer the relevant asset is a chargeable intangible asset in relation to the transferor,

(c) immediately after the transfer the relevant asset is a chargeable intangible asset in relation to the transferee,

(d) the transferee—

(i) is a member of the group at the time of the transfer, or

(ii) subsequently becomes a member of the group,

(e) the transferee ceases to be a member of the group during the period of 6 years after the date of the transfer, and

(f) when the transferee ceases to be a member of the group, the relevant asset is held by the transferee or an associated company (see section 788(3)) also leaving the group.

(2) This Part applies as if the transferee—

(a) had realised the relevant asset immediately after its transfer to the transferee for its market value at that time, and

(b) had immediately reacquired the asset at that value.

(3) The adjustments to be made as a result of subsection (2), by the transferee or a company to which the relevant asset has been subsequently transferred, in relation to the relevant period must be made by bringing the total net credit or debit into account as if it had arisen immediately before the transferee ceased to be a member of the group.

(4) In subsection (3) “the relevant period” means the period between—

(a) the transfer of the relevant asset to the transferee, and

(b) the transferee ceasing to be a member of the group.

(5) This section is subject to—

(a) section 782 (certain transferees of businesses etc not treated as leaving group),

(b) section 783 (associated companies leaving group at the same time),

(c) section 785 (principal company becoming member of another group),

(d) section 787 (company ceasing to be member of group because of exempt distribution), and

(e) section 789 (merger carried out for genuine commercial reasons).

(6) See section 788 (provisions supplementing this section and sections 781 to 787) for the interpretation of certain expressions used in this section or those sections.

(7) For the way in which Chapter 7 applies if a company is treated as having realised an asset as a result of this section, see section 791 (application of roll-over relief in relation to degrouping charge).