Taxation (International and Other Provisions) Act 2010 section 116

Introduction to section 117

Section 116 sets out the conditions that must be met before section 117 (which provides relief in respect of certain cross-border business transfers) can apply, covering transfers of loan relationships, derivative contracts, and intangible fixed assets between UK-resident companies and companies resident in EU member states.

• Two alternative conditions (A and B) can trigger the relief: Condition A covers a straightforward transfer of a business (or part) from a UK company to a member state company; Condition B covers a partial business transfer where the UK transferor continues to trade afterwards and receives shares or debentures in exchange.
• The type of asset transferred determines additional requirements: loan relationship transfers under Condition A must be partly in exchange for shares or debentures; derivative contract transfers require a claim by the transferor; and intangible fixed asset transfers require the companies to be incorporated in a relevant state and the transfer to include substantially all business assets.
• A "relevant state" means the United Kingdom or an EU member state, and a company is treated as resident in a relevant state only if it is subject to tax there and is not treated under a double taxation treaty as resident outside a relevant state.
• A claim for relief under this section in respect of intangible fixed assets cannot be made if a claim has already been made under section 827 of the Corporation Tax Act 2009 to postpone the charge on transferring assets to a non-UK resident company.

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