Corporation Tax Act 2009 section 31

Restriction on deductions: payments in respect of intangible assets

Section 31 restricts the tax deductions a UK permanent establishment of a non-UK resident company can claim for internal payments relating to the use of intangible assets.

• No tax deduction is allowed for royalties or similar payments made by the permanent establishment to another part of the same non-UK resident company for the use of intangible assets held by that company.
• Contributions by the permanent establishment towards the costs of creating an intangible asset may still be deducted.
• An "intangible asset" takes its meaning from accounting standards and includes any intellectual property.
• The restriction exists because it is difficult to allocate ownership of intangibles to any one part of a company as if it were an independent enterprise.