On 7 November 2018 the UK government published a summary of responses to the consultation on reforms to the corporate intangibles regime.

The corporate intangibles regime was introduced in 2002 and provided companies with relief for the cost of acquiring intangible assets and goodwill by allowing a deduction from taxable income for the amortisation and impairment expenses recognised in the accounts. It also taxed receipts in respect of intangible assets as income.

In the Finance Act 2015 a new restriction was introduced denying relief for certain “relevant assets” including goodwill and assets that would normally be closely associated with the business goodwill such as customer information; customer relationships; unregistered marks or signs; or a licence in relation to those assets.

Those changes applied to relevant assets acquired on or after 8 July 2015. As a result of the change the intangible assets regime currently gives a deduction for those assets only at the time of disposal. The reason given by the government for the change was that allowing deductions for amortisation of goodwill was an expensive relief and could cause distortions in business mergers and acquisitions by giving an incentive to structure an acquisition of a business as a purchase of a trade and assets including goodwill rather than a share purchase. In the consultation document the government explored the impact on business of this issue.

The consultation entitled Review of the Corporate Intangible Fixed Assets Regime was open for comments from 19 February 2018 to 11 May 2018. The consultation requested comments on aspects of the intangibles regime including the exclusion of pre-2002 assets from the regime; the exclusion of goodwill and customer-related intangibles; the de-grouping charge; and the election for fixed rate relief at 4% per year.

The document issued on 7 November 2018 summarises comments received from the consultation and also outlines the UK government’s policy responses. In the document the government sets out detailed proposals for the partial reinstatement of relief for goodwill acquired in businesses with eligible intellectual property. The stated objective of the reforms is to simplify the intangibles regime and to make it more effective in promoting economic growth.

The government intends to introduce legislation to implement the proposed changes in Finance Bill 2018 to 2019. There will also be draft legislation in relation to the degrouping charge rules.