CH 11 - Intangible Fixed Assets - Related Parties Flashcards
When for IFA purposes, a person (A) is related to a company (B)
if B is a close company and A is a participator or an associate of a participator in B.:
When Royalties Paybles are not deductible on an accrual basis?
A royalty is not deductible on an accruals basis, but is instead only deductible when payment is made if:
- the royalty is payable to a related party; and
- the royalty has not been paid within 12 months of the end of the accounting period; and
- the royalty receivable has not been charged to corporation tax.
What are the dates relevant for GW tax relief?
1 April 2002
* where ST or PS started on or after 1 April 2002 the treatment of GW for the company depends on incorporation
1 April 2019
* if incorporation is on or after 1 April 2019, tax relief is usually not available for the amortisation or impairment of GW for the company.
When exemption applies for tax relief on GW?
An exception is if the goodwill was acquired by the sole trader or partnership from an unconnected 3rd party, on or after 1 April 2019, and is transferred to the company along with other qualifying intellectual property.
Tax relief is broadly given at 6.5% per annum on the lower of:
- the cost of the goodwill, and
- six times the amount of the qualifying intellectual property, with some restrictions.
Qualifying intellectual property includes:
- patents;
- registered designs; and
- copyright or design rights.
What tax relief is broadly given on exception if the GW was acquired by ST or PS from unconnected third party on or after 1 April 2019 along with qualifying intellectual property?
Tax relief is broadly given at 6.5% per annum on the lower of:
- the cost of the goodwill, and
- six times the amount of the qualifying intellectual property, with some restrictions
What is qualifying intellectual property for IFA?
Qualifying intellectual property includes:
* patents;
* registered designs; and
* copyright or design rights.
