Corporation Tax Act 2010 section 753

Value of transferred income stream treated as income

Section 753 explains how the value of a transferred income stream is treated as taxable income of the company that made the transfer, and sets out the rules for determining the amount and timing of that income.

• When a company transfers its right to receive an income stream, the value of that transfer is treated as the transferor's income chargeable to corporation tax, in the same way the original receipts would have been taxed had the transfer not occurred.
• The taxable amount is normally the consideration received for the transfer, but if that consideration is substantially below market value — or if there is no consideration at all — the market value of the right at the time of transfer is used instead.
• The timing of when this income is recognised follows generally accepted accounting practice: the portion up to the consideration amount arises when the consideration is recognised in the transferor's profit and loss account, and any excess (where market value is used) arises when the consideration would have been recognised had it equalled market value.
• If at any point it becomes reasonable to conclude that the income would not otherwise be treated as arising in an accounting period of the transferor under these timing rules, the income is instead treated as arising immediately before that point.

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