Commentary

D7.323 Chargeable gains—asset transferred within a group

Corporate tax
Corporate tax | Commentary

D7.323 Chargeable gains—asset transferred within a group

Corporate tax | Commentary

D7.323 Chargeable gains—asset transferred within a group

Separate anti-avoidance provisions apply1 on a change of ownership of a company with investment business where, after the change, there is an intra-group transfer to the company of an asset and either2:

  1.  

    (a)     where the change of ownership took place on or after 1 April 2017, that asset is sold outside the group within five years of the change of ownership of the company (three years if the change of ownership is before 1 April 2017); or

  2.  

    (b)     where the change of ownership took place on or after 1 April 2017, a chargeable gain is treated as accruing to the company by reason of an election to allocate the gain to it (D2.523)3.

These provisions do not apply where there has been a major change in the nature, conduct or size of the company's business or a significant increase in the company's capital, because any avoidance of a chargeable gain in such circumstances will be countered by the provisions described in D7.3204.

The principle behind the provisions is that management expenses incurred before the change of ownership cannot be set against a chargeable gain on the sale of the asset transferred, but the calculations to achieve this are complicated.

The provisions apply where5:

  1.  

    (a)     there is a change in the ownership of a company with investment business (see D7.320);

  2.  

    (b)     after the change, the company acquires an asset from another company in the same group either under a:

    1.  

      (1)     no gain/no loss transaction (see

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