On 19 February 2018, the Government launched a consultation on the UK’s corporate intangible fixed assets regime (IFA regime). The consultation will review the operation of the IFA regime and consider whether there is any scope to introduce targeted, cost effective reforms that support ease of administration and international competitiveness.
Changes under consideration include bringing pre-1 April 2002 intangible fixed assets into the regime, re-introducing relief for amortisation of goodwill and customer related intangibles, amending the de-grouping charge following a reorganisation and reviewing the 4% fixed rate of relief election.
The consultation runs until 11 May 2018 and it appears likely that any changes that are made could potentially be implemented as soon as Finance Bill 2019.
The timing of this review is significant, given recent international tax changes including US tax reform and further outputs from the BEPS review, as international groups will be reviewing the location of their intangible assets, as well as their supply chains more generally. These changes are not going to solely impact international businesses, however.
The potential impact of these proposed changes to the IFA regime could cost the Exchequer badly and the Government will want to know what benefits these changes could bring to business. As such, responses from businesses and the profession to the consultation will be critical in shaping any legislative changes that may come from the much-needed review of this area of corporation tax.