The capital gains degrouping rules apply where, broadly speaking, a company leaves a group holding an asset that was transferred to it by another member of the group within the previous six years. For more information on:TCGA 1992, ss 179(1), 179(3)
the purpose of the degrouping rules
the circumstances in which a degrouping gain or loss will arise
how to calculate a degrouping gain or loss
how the rules apply when a company leaves a group as a result of:
a share disposal
a share for share exchange or reconstruction, or
an event that is not a share disposal, and
how the degrouping rules interact with the substantial shareholdings exemption
see: Capital gains degrouping.
This note looks at some additional rules that apply to the degrouping provisions.
A company that would otherwise suffer a degrouping charge may claim to have the charge reduced by an amount that is just and reasonable.TCGA 1992, s 179ZA(4)
The Capital Gains Manual describes the type of situation in which this rule will apply. Say B Ltd has a subsidiary A Ltd. B Ltd acquired an asset for £100. B Ltd transfers the asset to A Ltd when it is worth £300. B Ltd later sells A Ltd out of the group for its market value at that time. A degrouping gain of (ignoring indexation) £200 would arise under the basic rule for calculating degrouping charges. This charge would operate as an increase to the disposal consideration in B Ltd's corporation tax on chargeable gains (CGT) calculation upon disposing of A Ltd.Capital Gains Manual, CG45430
HMRC's view is that
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