Budget 2016: Related party rules – partnerships and intangibles

Intangible fixed asset rules apply to companies and generally permit a corporation tax deduction for the amortisation of intangibles so long as the asset was created or acquired from an unrelated party after 1 April 2002.

There are special rules that apply where a company acquired an intangible asset from a related party; the availability of a corporation tax deduction depends on when the asset was created by the related party, and when the asset was acquired from that person.

The rules do not specifically say how partnerships with corporate partners should be treated. Although a partnership is not a company, if the partnership holds intangible assets it is possible for the company to claim a corporation tax deduction for its share of any amortisation.

The existing rules will be amended in relation to transactions that occur on or after 25 November 2015 to ensure that transfers of intangible assets to a partnership with corporate members will not circumvent the intangible fixed asset commencement rules.

These provisions clarify the intangible fixed asset rules where a partnership has corporate members.