Commentary

D2.331 Group capital gains—Exclusions from the degrouping charge

Corporate tax
Corporate tax | Commentary

D2.331 Group capital gains—Exclusions from the degrouping charge

Corporate tax | Commentary

D2.331 Group capital gains—Exclusions from the degrouping charge

The degrouping charge is not triggered when:

  1.  

    (a)     the company holding the relevant asset ceases to be a member of a group as a result of its only subsidiary leaving the group (the 'two company group practice')1

  2.  

    (b)     a company leaves the group in consequence of another company in the group ceasing to exist (the 'liquidation let-out'). HMRC consider that the only situation where this exclusion applies is where a parent company ceases to be a member of a group on the occasion of its only subsidiary ceasing to exist on dissolution (or all its subsidiaries ceasing to exist simultaneously on dissolution)2. The commencement of a winding up does not break the group relationship, and HMRC take the view that a company does not cease to exist until actual dissolution, ie three months after registration of the liquidator's final return3

  3.  

    (c)     the transferee and transferor leave the group at the same time and the two companies would together form a separate group (the 'sub-group exemption', see below)

  4.  

    (d)     certain mergers are carried out for bona fide commercial reasons (see D6.407)4

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