Hive downs

James Tryfonos considers the reform of the intangibles regime in FA 2019 and provides a refresher on how it works in practice on a pre-sale hive down

One of the measures in Finance Act 2019 (FA 2019), with effect from 7 November 2018, reforms the intangibles regime. Its intention (so the Policy Paper says) is to ‘reduce frictions that inhibit commercial mergers and acquisitions’. By taking a pre-sale hive down as an example, this article provides a refresher on how this should work in practice.

The intangible fixed asset regime

Broadly speaking, intangible fixed assets (IFAs) are (in the main) goodwill and intellectual property. As such, IFAs can be immensely valuable. The specific IFA regime was introduced for companies in April 2002. Until that time, companies’ IFAs were treated no differently from other assets and were taxed under general principles (as they still are for individuals).