HMRC's consultation on the intangibles tax code came to an end on 11 May 2018. 

The regime has been in place for 16 years and while the fundamental principles remain the same, there have been a number of changes. Most of these have focused on tackling avoidance as opposed to simplification, with the inevitable result that the regime has lost some of its coherence and has become increasingly complex. There are some tricky areas that need to be tackled, not all of which were raised in the consultation.

The consultation focused on four key areas:

1. The dual system of taxation depending on whether intangible assets are acquired or created on or after 1 April 2002

2. Restriction of amortisation of goodwill and customer related intangibles

3. The de-grouping charge anomaly for post-April 2002 assets

4. Competitiveness of the fixed rate of amortisation 

There are a number of targeted issues that should have been part of the review but which were not specifically referred to in the consultation document. 

The consultation was very quiet on the treatment of intangibles in partnerships. On setting up, collapsing or otherwise re-organising a partnership, transfers of chargeable gains assets and loan relationships are broadly tax neutral, whereas transfers of intangibles are taxed at market value.  Where the rules impose a market value charge, it presents a significant impediment to the straightforward winding up of an LLP. 

Another area that was not raised in the consultation is the ambiguity that can arise in relation to the appropriate treatment of an intra-group transfer of a licence granted over an intangible asset. This is because the grant of a licence is not the transfer of an intangible asset, rather it is considered to be the ‘creation’ of a new intangible asset.

As the government mulls over the responses it has received to the consultation, there is a good opportunity to make real improvements to the obvious and tricky areas of taxing intangibles.