Income Tax (Trading and Other Income) Act 2005 section 39–40

Certain telecommunication rights

Sections 39 and 40 provide transitional relief from the intellectual property rules in Chapter 10 of Part 2 for indefeasible rights to use a telecommunications cable system (IRUs) acquired before 21 March 2000, or acquired later from connected parties who originally held them before that date.

• An indefeasible right to use a telecommunications cable system (IRU) acquired before 21 March 2000 is exempt from the Chapter 10 intellectual property provisions.
• The exemption also applies where an IRU is acquired on or after 21 March 2000 from an associate or associated company, provided that associate or associated company originally acquired the IRU before that date.
• An "associate" and "associated company" are defined by reference to Corporation Tax Act 2010 sections 448 and 449 respectively, with "associated company" in relation to a non-corporate person meaning a company that person controls.
• The effect is to grandfather pre-21 March 2000 IRUs from the income tax rules on intellectual property, even if they are subsequently transferred within a connected group.