Commentary

D1.650 Intangible assets—exemptions from the degrouping charge

Corporate tax
Corporate tax | Commentary

D1.650 Intangible assets—exemptions from the degrouping charge

Corporate tax | Commentary

D1.650 Intangible assets—exemptions from the degrouping charge

There are exemptions from the degrouping charge, which are broadly the same as those in the capital gains grouping rules (see D2.331) and are as follows1:

  1.  

    •     a relevant share disposal

  2.  

    •     associated companies leaving group at the same time

  3.  

    •     principal company becoming member of another group

  4.  

    •     demerger provisions apply

  5.  

    •     merger carried out for genuine commercial reasons

  6.  

    •     group member ceasing to exist

  7.  

    •     prior to IP completion day2, the formation of a Societas Europaea by merger

  8.  

    •     transfer of a UK business to another company

These are detailed further below.

Degrouping exemption—relevant share disposal

Where a company ceases to be a member of a group on or after 7 November 2018, a degrouping charge will not arise where the company leaves the group as a result of a share disposal by another company where that share disposal qualifies for the substantial shareholding exemption (SSE) under TCGA 1992, Sch 7AC, para 1(see D1.1001)3. This is as long as the share disposal is not an arrangement under which the recipient is to dispose of any of the shares to another person4. This prevents the exemption from applying to multiple transactions where SSE may not be available in relation to every disposal of the shares. The intention to sell is tested at the time of the share disposal and therefore does not restrict the acquiring company from making a subsequent decision to sell the shares in a commercial transaction to another person5.

The treatment of

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial