Corporate intangible fixed assets regime – a consultation

The government has launched a consultation Review of the corporate Intangible Fixed Assets regime for comment by 11 May 2018.

This is an area identified by the Office of Tax Simplification in its July 2017 report Simplification of the corporation tax regime which set out the nature of the regime and the complications that have arisen since the regime’s introduction in 2002.

“This regime, introduced in 2002, gives relief for expenditure on intangible fixed assets written off over time (amortised) to profit & loss account, and taxes receivables arising from such intangible assets. The regime has generally been welcomed. However, the regime does not apply to pre-2002 assets so that, goodwill in respect of a business that existed before 2002 does not qualify for any relief, whereas acquired goodwill from 2002 does qualify.

"So there was a two-tier regime between:

  • goodwill that existed before 2002 and which remains within the capital gains regime
  • goodwill acquired since 2002 which is relieved as a trading expense over time

"The situation, which was regularly raised with us in meetings, has been further complicated by legislation in Finance (No 2) Act 2015 which denies a deduction for goodwill and other assets such as customer lists and unregistered trademarks (‘relevant assets’) acquired on or after July 2015, even though any gains on such assets are still taxed as income. So there is now a three tier scheme for goodwill depending on whether it was acquired before 2002, between 2002 and 2015 or after 2015. This does seem to be an over-complication, and while the 2015 changes appear designed to counter avoidance, they catch innocent transactions as well.”

The current consultation is specifically seeking views on:

  • The impact of the 1 April 2002 commencement rule (the “pre-FA02 rule”) and the restriction on goodwill and customer related intangibles on the complexity and competitiveness of the regime.
  • The use and competitiveness of the election for a 4% per annum fixed rate of relief.
  • The impact of the regime’s de-grouping rules on mergers and acquisitions.

The reason behind the consultation, as set out in the Introduction, is that:

“in light of the growing importance of intellectual property (“IP”) to the productivity of modern businesses, and the restructuring of IP ownership within multinational groups in response to recent international tax changes, it is now the right time for a more comprehensive review of the regime.”


“the government is generally interested in understanding whether there are targeted changes that could be made to the IFA regime to support its policy objectives, and deliver value-for-money in terms of the economic and fiscal impacts on the UK.”

If any readers have comments on the regime which are relevant to the current consultation please get in touch with Ian Young