Assets were from related party

The taxpayer was incorporated in May 2013 by MDUK RWS and TMUK. The latter were all UK-resident companies and they transferred their trades intangible fixed assets and goodwill (the material assets) to the taxpayer in July 2013 in return for membership units in the taxpayer.

The taxpayer amortised the material assets in its accounts. Each member then included a deduction for a share of the amortisation in their accounts.

HMRC disallowed the deductions on the basis that each corporate member was a ‘related party’ of the notional company ie the taxpayer whose taxable profits were being determined. As a result the material assets fell outside CTA 2009 Part 8. The taxpayers appealed.

The First-tier Tribunal held that each corporate member of the taxpayer was a ‘related party’ (within the meaning of CTA 2009 s 835). The transfer of the material assets from those corporate members...