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In addition to identifying the owner, functions and risks associated with intangible items it is also necessary to establish the specific controlled transactions involving intangible items which either involve the transfer of the intangible item (by sale or perpetual licence) or the transfer of rights in the intangible (by licence or a similar agreement). The key distinction between the two is that ownership of the asset is transferred in the case of a sale. When an asset is licensed, ownership of the asset remains with the licensor — at least at the start of the licensing agreement. See HMRC guidance at INTM440120 for more details on how intangibles are exploited.

A separate royalty may be paid when intellectual property is transferred if compensation for the use of intangible property has not already been included in the price charged for the sale of goods. If the price of a transferred good already reflects the use of the intangible (ie a higher intra-group price), then the transfer price already encompasses the risk and return and an additional royalty is not