Income Tax (Trading and Other Income) Act 2005 section 584

Exceptions to charge under section 583

Section 584 sets out three specific situations where the income tax charge on know-how disposals under section 583 does not apply.

• No charge applies where the consideration is already taxed as royalty income under section 579 or brought into account as a disposal value for capital allowances purposes under section 462 of the Capital Allowances Act 2001.
• No charge applies where the consideration is treated as a capital receipt for goodwill because the know-how was disposed of as part of a sale of all or part of a trade under section 194(2).
• No charge applies where the know-how is sold between connected parties — that is, where one party controls the other, or both are controlled by the same person — and both or either party is a body of persons (including a firm).
• For know-how used in a trade, separate rules in Chapter 14 of Part 2 and section 575 take priority and should be considered alongside these exceptions.