Corporation Tax Act 2009 section 845

Transfer between company and related party treated as at market value

Section 845 establishes that when an intangible asset is transferred between a company and a related party, the transfer must be treated as taking place at market value for all tax purposes.

• Transfers of intangible assets between a company and a related party are deemed to occur at market value where the asset is a chargeable intangible asset either in the hands of the transferor before the transfer or in the hands of the transferee after the transfer
• Several exceptions may override this market value rule, including where the transfer is not at arm's length, involves other taxes, qualifies as tax-neutral, relates to exempt foreign permanent establishments, involves gifts of business assets, qualifies for disincorporation relief, or concerns pre-Finance Act 2002 assets
• The definition of related party is extended to include any person where the participation condition under the transfer pricing rules is met in relation to the company or firm, ensuring that connected parties cannot circumvent the rule
• Market value means the price the asset might reasonably be expected to fetch on a sale in the open market, and this deemed market value applies across income tax, corporation tax, and chargeable gains tax