Corporation Tax Act 2009 section 799

Disregard of payments between group members for reliefs

Section 799 ensures that payments made between companies in the same group to compensate for the transfer of certain intangible asset reliefs are ignored for corporation tax purposes, provided the payment does not exceed the value of the relief transferred.

• When one group company compensates another for accepting a reduced tax position through group roll-over relief or a reallocated degrouping charge, that payment is not treated as taxable income or an allowable loss for either company
• The payment must not exceed the amount of the relevant relief — that is, the reduction in acquisition costs, reduction in tax written-down value, or the degrouping gain reallocated — otherwise the favourable treatment does not apply
• A qualifying payment must be made under an agreement between the two companies concerned and must relate to a specific roll-over relief claim or degrouping charge reallocation election
• Qualifying payments are also excluded from being treated as a distribution for any corporation tax purpose, so they do not give rise to dividend-related tax consequences