In part two of our trade and asset sales series, this article will address the tax consequences of the disposal of various asset types, including intangible fixed assets and capital allowance assets, and will end with a look at the implications for tax losses, VAT and SDLT.

Intangible fixed assets

The disposal of an intangible fixed asset (IFA) in the course of a trade and asset sale gives rise to an income profit of either a trading or non-trading character depending on the nature of the asset’s use within the business. The distinction for tax purposes between capital and revenue expenditure is of no significance for these purposes.

In most cases, the taxable profit or loss is the accounting profit recognised by the company in its financial statements. Further adjustments may however be required, eg, in relation to goodwill, or where the tax and accounting base costs of an asset are not the same following a claim for IFA roll-over relief.