The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance note covers rules applicable to companies who are in a group for capital gains purposes. For more information on the definition of a gains group, and an overview of the consequences, see the Group gains guidance note.
For the treatment of degrouping charges for assets within the intangible regime post 2002, see the Degrouping charges and elections ― IFAs guidance note.
As well as the capital gains degrouping rules there are rules linked to clawback provisions in relation to exempt group transfers for Stamp Duty and Stamp Duty Land Tax.
Please note that changes to the corporate gains rules for groups of companies were made by Finance Act 2011. The measures mainly aimed to simplify the tax treatment of chargeable gains for corporate groups, with changes to degrouping charges, SSE and the repeal of certain measures now considered redundant. See below for details.
The changes have effect from 19 July 2011, the date of Royal Assent. However, companies can elect to apply the new rules relating to degrouping charges in respect of share transfers between 1 April 2011 and that date.
Assets are transferred between group companies on a no gain / no loss basis. However, if a company leaves the group within six years of an intra-group transfer, whilst still owning the transferred asset, a ‘degrouping’ or ‘exit’ charge will arise. Degrouping charges also arise where a rollover relief claim was made in respect of an asset transferred intra group, and the transferor company leaves the group owning the ‘replacement’ asset.
Degrouping charges are a key area of risk on the acquisition of a company. For disposals before 19 July 2011, the gain itself is taxed on the departing company in the chargeable accounting period of it leaving the group. If there are latent degrouping charges as a result of a previous intra-group transfer then the purchasing group will want to mitigate the risk that it will bear the charge. This may be
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‘Hold-over’ relief allows for the deferral of a gain that would otherwise arise in relation to a disposal. No capital gains tax (CGT) is due in respect of the disposal, but the base cost of the asset for the transferee for the purpose of a future disposal is reduced by an amount equal to the gain
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