D6.450 Scheme of reconstruction involving a transfer of a business
Where a company undertakes a scheme of reconstruction involving a transfer of a business, relief from corporation tax on chargeable gains is given by deeming the business to be sold for such price as gives rise to neither gain nor loss1. Where a degrouping charge results in additional consideration being deemed to be received, the additional consideration is disregarded for these purposes2 (see D2.330).
The transferee company is correspondingly deemed to have acquired the assets when the transferor company acquired them3.
In the case of assets held at 6 April 1965 the transferee company is deemed to have acquired the assets when the transferor company acquired them4.
Where the transfer takes place after 31 March 1982 and there has been no previous disposal of the assets (other than at no gain/no loss) since that date, the rebasing rules5 will apply if the transferee company subsequently disposes of the assets after 5 April 1988 (other than by means of a no gain/no loss disposal6). Broadly, the rebasing rules deem the transferee company to have held the assets itself on 31 March 1982 and limit the chargeable gain or allowable loss accruing on the transferee company's disposal of the assets by reference to their market value at 31 March 1982 (see C2.601–C2.609)7.
For the above relief from corporation tax on chargeable gains to apply, the following conditions must be satisfied8:
(a) the scheme of reconstruction (as defined at D6.203) must involve