D1.8104 European Community cross border transfers
Transfer of a UK business
Where the whole or part of a UK business is transferred between companies which are resident in the UK or an EU member state, any assets or liabilities in respect of a derivative contract so transferred shall (if certain conditions are met, and both parties make a claim1), be treated for UK tax purposes as if they are transferred between the transferor and transferee companies for a consideration equal to what would have been the carrying value of the derivative contract transferred had a period of account of the transferor ended immediately before the date that the transferor ceased to be a party to the contract2.
As for cross border mergers (D1.8103), where the transferor accounts for a derivative contract using a fair value basis of accounting the transferor is deemed to have disposed of the derivative contract at its fair value at the date at which the transferee becomes a party to that derivative contract. The transferee in turn is deemed to have become a party to the derivative contract for the same consideration3.
The equivalent provisions on the transfer of intangible assets and loan relationships are at D1.663 and D1.769 respectively. The capital gains treatment and further consequential amendments are at D6.522, D6.524.
The relief only applies if:
(a) The transfer is carried out for genuine commercial reasons, where the avoidance of tax is not the main purpose, or one of the main purposes, of the transaction4. The companies may
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