42 Exemption for direct and indirect demergers42.1 OverviewIn certain circumstances, a distribution by a company of part of its trade or some of its trading subsidiaries is an exempt distribution and therefore not subject to the tax treatment set out above. The idea behind this relief is to enable distinct businesses currently conducted within one organisation to be separated, and managed and owned independently. As a result, it is possible to demerge businesses to different groups of shareholders rather than pro rata amongst all shareholders. The relief covers both1:42.1.1 ‘direct’ demergers, that is, the straightforward distribution by a
In certain circumstances, a distribution by a company of part of its trade or some of its trading subsidiaries is an exempt distribution and therefore not subject to the tax treatment set out above. The idea behind this relief is to enable distinct businesses currently conducted within one organisation to be separated, and managed and owned independently. As a result, it is possible to demerge businesses to different groups of shareholders rather than pro rata amongst all shareholders. The relief covers both1:
‘direct’ demergers, that is, the straightforward distribution by a
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