Corporation Tax Act 2009 section 849AB

Grant of licence or other right treated as at market value

Section 849AB requires that when a licence or other right over an intangible asset is granted between related parties at an off-market price, the transaction must be treated as taking place at market value for tax purposes.

• When a company grants or receives a licence or right over an intangible asset to or from a related party, and the price is not at market value, the transaction is adjusted to market value for tax purposes
• If the licence or right is granted at below market value, the grantor is treated as having received market value; if granted at above market value, the grantee is treated as having paid only market value
• The market value adjustment applies only where the intangible asset is a chargeable intangible asset for the grantor immediately before the grant, or the licence or right is a chargeable intangible asset for the grantee immediately after the grant
• The definition of related party is extended to include persons meeting the participation condition under international tax provisions, and the rules also apply to partnerships and LLPs that include at least one corporate member