What is the preserved status condition under section 879G of the Corporation Tax Act 2009?

The preserved status condition under section 879G identifies intangible assets that would have been pre-FA 2019 relevant assets had they been acquired directly by company C. It extends the restriction on goodwill-related tax debits to assets derived from qualifying assets held by related parties during specified periods, preventing avoidance through intermediate transfers.

What are the two routes to meeting the preserved status condition in section 879G?

The first route requires the asset to have been acquired or created between 8 July 2015 and 31 March 2019 and to have been a chargeable intangible asset in the hands of a related party of company C or the transferor between 29 October 2018 and 31 March 2019. The second route applies where the asset was a pre-FA 2019 relevant asset in a related party's hands between 1 April 2019 and the acquisition date.

How is apportionment handled when a relevant asset is only partly derived from a pre-FA 2019 asset?

Where a relevant asset is only partly derived from a pre-FA 2019 asset, section 879G requires any necessary apportionment to be carried out on a just and reasonable basis. For example, if only 60% of a new asset's value derives from the original qualifying asset, only 60% would be subject to the restriction on goodwill-related debits.

Does it matter who created the relevant asset for the purposes of section 879G?

No, section 879G explicitly provides that it does not matter who originally created the relevant asset. The restriction on goodwill-related debits applies regardless of the asset's creator. The extended definition of related party from section 879E(4) to (7) applies for the purposes of both section 879F and section 879G.

Corporation Tax Act 2009 section 879G

The preserved status condition etc.

Section 879G defines when an intangible asset meets the "preserved status condition" for the purposes of the third case determining whether an asset is a pre-Finance Act 2019 relevant asset, thereby extending the restriction on goodwill-related debits to assets derived from such qualifying assets.

An asset meets the preserved status condition if it was acquired or created between 8 July 2015 and 31 March 2019 and was a chargeable intangible asset in the hands of a related party of company C or the transferor between 29 October 2018 and 31 March 2019.
The condition is also met if the asset was a pre-FA 2019 relevant asset in the hands of a related party of company C or the transferor at any time between 1 April 2019 and the date of the acquisition in question.
Where a relevant asset is only partly derived from a pre-FA 2019 asset, any necessary apportionment must be made on a just and reasonable basis.
It does not matter who created the relevant asset, and the extended definition of "related party" from section 879E(4) to (7) applies for these purposes.

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