How does the hypothetical test in section 879H work?

The hypothetical test asks whether, if the person who disposed of the asset had instead transferred it directly to the acquiring company at the time of disposal, that asset would have been a pre-FA 2019 relevant asset under any of the other three cases in sections 879D to 879G. If yes, the actually acquired asset inherits that status.

Does section 879H require the acquired asset to be identical to the disposed asset?

No. Section 879H is deliberately broad. It applies regardless of whether the acquired asset is identical to the disposed asset, whether it was acquired at the time of disposal, or whether it arose through merging or restructuring assets. This breadth ensures the anti-avoidance purpose is effective regardless of the transaction's precise mechanics.

Why is section 879H important for preventing tax avoidance?

Without section 879H, parties could structure transactions so that a pre-FA 2019 asset loses its status by passing through an intermediary or being transformed before reaching the acquiring company. This provision ensures that indirect arrangements cannot circumvent the pre-FA 2019 rules, preserving the intended tax treatment of intangible fixed assets.

Corporation Tax Act 2009 section 879H

Pre-FA 2019 relevant asset: the fourth case

Section 879H defines the fourth and final case in which an intangible fixed asset is classified as a pre-Finance Act 2019 relevant asset, dealing with situations where a company acquires an asset on or after 1 April 2019 in connection with another person's disposal of what would have been a pre-FA 2019 asset.

This is one of four cases (sections 879D to 879H) that determine whether an asset qualifies as a pre-FA 2019 relevant asset, which affects the tax treatment available for that asset.
The rule applies where a company acquires a relevant asset on or after 1 April 2019, directly or indirectly as a consequence of, or in connection with, another person disposing of a relevant asset.
The disposed-of asset must be one that would have qualified as a pre-FA 2019 relevant asset in the acquiring company's hands, had it been transferred directly to that company at the time of disposal.
It does not matter whether the acquired asset is the same as the disposed asset, whether it is acquired at the time of disposal, or whether it arises through merging assets or other means.

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