Office of Public Sector Information
Section 252.
1 (1) In this Schedule—
“the Allowances Act” means the [1990 c. 1.] Capital Allowances Act 1990;
“the Board” means the British Railways Board;
“fixture” has the same meaning as it has in Chapter VI of Part II of the Allowances Act;
“franchise company” has the meaning given by section 85(8) of the [1993 c. 43.] Railways Act 1993;
“the Franchising Director” means the Director of Passenger Rail Franchising;
“the Gains Act” means the [1992 c. 12.] Taxation of Chargeable Gains Act 1992;
“predecessor”, in relation to any relevant transfer, means the body from which the property, rights or liabilities in question are transferred by virtue of the restructuring scheme in question;
“property”, “rights” and “liabilities” have the same meaning as they have in Part II of the Railways Act 1993;
“publicly owned railway company” has the same meaning as it has in the Railways Act 1993;
“relevant transfer” means a transfer of any property, rights or liabilities by virtue of a restructuring scheme;
“restructuring scheme” means a section 85 transfer scheme made by, or pursuant to a direction of, the Secretary of State, if and to the extent that the transfer scheme provides for the transfer of property, rights or liabilities from—
the Board,
a wholly owned subsidiary of the Board,
a publicly owned railway company, or
a company which is wholly owned by the Franchising Director,
to any other body falling within paragraphs (a) to (d) above;
“section 85 transfer scheme” means a scheme made under or by virtue of section 85 of the Railways Act 1993;
“subsidiary” has the meaning given by section 736 of the [1985 c. 6.] Companies Act 1985;
“successor company” has the same meaning as it has in Part II of the Railways Act 1993;
“transfer date” shall be construed in accordance with section 85(6) of the Railways Act 1993;
“transfer scheme” means a scheme made under or by virtue of section 85 or 86 of the Railways Act 1993;
“transferee”, in relation to a relevant transfer, means the body to which the property, rights or liabilities in question are transferred by virtue of the restructuring scheme in question;
“wholly owned subsidiary” has the meaning given by section 736 of the [1985 c. 6.] Companies Act 1985.
(2) Section 151(2) and (3) of the [1993 c. 43.] Railways Act 1993 (companies wholly owned by the Crown or the Franchising Director) shall have effect for the purposes of this Schedule as it has effect for the purposes of that Act.
(3) Any reference in this Schedule to “assignment” shall be construed in Scotland as a reference to “assignation”.
(4) This Schedule—
(a) so far as it relates to income tax, shall be construed as one with the Income Tax Acts,
(b) so far as it relates to corporation tax, shall be construed as one with the Corporation Tax Acts, and
(c) so far as it relates to capital allowances, shall be construed as one with the Capital Allowances Acts.
2 (1) For the purposes of the Gains Act, where there is a relevant transfer, the disposal of property, rights and liabilities which is constituted by that transfer shall, subject to the following provisions of this Schedule, be taken, in relation to the transferee as well as the predecessor, to be for a consideration such that no gain or loss accrues to the predecessor.
(2) Section 35(3)(d) of the Gains Act (list of provisions for transfers without gain or loss for purposes of provisions applying to assets held on 31st March 1982) shall have effect with the omission of the word “and” at the end of sub-paragraph (vii) and with the insertion, after sub-paragraph (viii), of the following sub-paragraph—
“(ix) paragraphs 2(1), 7(2), 11(3) and (4) and 25(2) of Schedule 24 to the Finance Act 1994;”.
(3) Section 171(1) of the Gains Act (which makes provision in relation to the disposal of assets from one member of a group of companies to another member of the group) shall not apply where the disposal in question is a relevant transfer.
3 (1) Subsection (4) of section 23 of the Gains Act (adjustments where compensation or insurance money used for purchase of replacement asset) shall have effect in accordance with sub-paragraph (3) below in any case where—
(a) there is a relevant transfer such that—
(i) any capital sum received by the predecessor by way of compensation for the loss or destruction of any asset, or under a policy of insurance of the risk of the loss or destruction of any asset, becomes available to the transferee; or
(ii) any right of the predecessor to receive such a sum is transferred to the transferee, and the transferee receives that sum; and
(b) the transferee acquires an asset in circumstances where—
(i) had there been no such relevant transfer, and
(ii) had the predecessor acquired the asset by the application of that sum,
the predecessor would be treated for the purposes of that subsection as having so acquired the asset in replacement for the asset lost or destroyed.
(2) Subsection (5) of that section (adjustments where a part of any compensation or insurance money is used for the purchase of a replacement asset) shall have effect in accordance with sub-paragraph (3) below in any case where—
(a) there is a relevant transfer such that—
(i) any capital sum received by the predecessor by way of compensation for the loss or destruction of any asset, or under a policy of insurance of the risk of the loss or destruction of any asset, becomes available to the transferee; or
(ii) any right of the predecessor to receive such a sum is transferred to the transferee, and the transferee receives that sum; and
(b) the transferee acquires an asset in circumstances where—
(i) had there been no such relevant transfer, and
(ii) had the predecessor acquired the asset by the application of all of that sum except for a part which was less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of the asset lost or destroyed,
the predecessor would be treated for the purposes of that subsection as having so acquired the asset in replacement for the asset lost or destroyed.
(3) In a case falling within sub-paragraph (1) or (2) above, subsection (4) or, as the case may be, subsection (5) of section 23 of the Gains Act shall have effect as if the transferee and the predecessor were the same person, except that—
(a) in a case falling within sub-paragraph (1)(a)(i) or (2)(a)(i) above—
(i) any claim under the subsection in question must be made by the predecessor and the transferee; and
(ii) any adjustment to be made in consequence of paragraph (a) of that subsection shall be made for the purposes only of the taxation of the predecessor; and
(b) in a case falling within sub-paragraph (1)(a)(ii) or (2)(a)(ii) above—
(i) any claim under the subsection in question must be made by the transferee; and
(ii) any adjustment to be made in consequence of paragraph (a) of that subsection shall be made for the purposes only of the taxation of the transferee.
4 (1) Nothing in Part II or III of the [1993 c. 43.] Railways Act 1993, and no instrument or agreement made, or other thing done, under or by virtue of either of those Parts, shall be regarded as a scheme or arrangement for the purposes of section 30 of the Gains Act (value-shifting).
(2) In any case where—
(a) an asset which is the subject of a relevant transfer or qualifying disposal has previously been the subject of a scheme or arrangements falling within subsection (1) of that section,
(b) in consequence, subsection (5) of that section (consideration on disposal to be treated as increased for certain purposes) would, apart from sub-paragraph (3) below, have had effect in relation to the consideration for the relevant transfer or qualifying disposal, and
(c) the consideration for the relevant transfer or qualifying disposal falls to be determined under paragraph 2 above or paragraph 7(2), 11(3) or 25(2) below,
sub-paragraph (3) below shall apply.
(3) Where this sub-paragraph applies—
(a) the said subsection (5) shall not have effect in relation to the consideration for the relevant transfer or qualifying disposal; but
(b) on the first subsequent disposal of the asset which is neither a relevant transfer or qualifying disposal nor a group disposal—
(i) that subsection shall have effect in relation to the consideration for that disposal (whether or not it would otherwise have done so); and
(ii) the increase that falls to be made under that subsection shall be so calculated as to include any increase which would, but for paragraph (a) above, have fallen to be made in relation to the relevant transfer or qualifying disposal.
(4) In this paragraph—
“group disposal” means a disposal which falls to be treated by virtue of section 171(1) of the Gains Act as made for a consideration such that no gain or loss accrues to the person making the disposal;
“qualifying disposal” means—
a disposal to which paragraph 7(2) below applies; or
a disposal falling within paragraph 11(3) or 25(2) below.
5 Subsection (1) of section 174 of the Gains Act (which applies section 41 of that Act to cases where assets have been acquired without gain or loss) shall have effect, without prejudice to paragraph 2 above or paragraph 7(2), 11(3) or (4) or 25(2) below, where there has been—
(a) a relevant transfer,
(b) a disposal to which paragraph 7(2) below applies, or
(c) a disposal falling within paragraph 11(3) or (4) or 25(2) below,
as if the asset to which the transfer or disposal relates had thereby been transferred and acquired in relevant circumstances, within the meaning of that subsection.
6 (1) Subject to the following provisions of this paragraph, where any asset, or any interest in an asset, is the subject of a relevant transfer, sections 152 to 160 of the Gains Act (roll-over relief on replacement of business assets) shall have effect as if—
(a) the asset or interest had been acquired by the transferee—
(i) at the time at which, and for the consideration for which, the predecessor acquired it; and
(ii) for the purpose of the asset’s use in a trade carried on by the transferee (and not wholly or partly for the purpose of realising a gain from the disposal of the asset or interest), but only to the extent that the predecessor’s acquisition was for the purpose of the asset’s use in a trade carried on by him (and not wholly or partly for the purpose of realising a gain from the disposal of the asset or interest);
(b) throughout the period during which the asset or interest was owned by the predecessor, it had been owned by the transferee; and
(c) to the extent that the predecessor—
(i) used the asset, or
(ii) in the case of an asset falling within head A of Class 1 in section 155 of that Act, used and occupied the asset,
during that period for the purposes of a trade carried on by him, the transferee had used or, as the case may be, used and occupied the asset for the purposes of a trade carried on by him.
(2) In any case where—
(a) a held-over gain would, but for the provisions of section 154 of the Gains Act (depreciating assets), have been carried forward to a depreciating asset, and
(b) that asset is the subject of a relevant transfer,
that section shall have effect as if the gain had accrued to, and the claim for it to be held over had been made by, the transferee and as if the predecessor’s acquisition of the depreciating asset had been the transferee’s acquisition of that asset.
(3) Where an asset, or an interest in an asset, is the subject of a relevant transfer, the predecessor shall not be entitled at any time after the coming into force of the relevant transfer to make any claim under section 152 or 153 of the Gains Act in respect of his acquisition of the asset or interest.
(4) Where an asset, or an interest in an asset, is the subject of a relevant transfer, the transferee shall not, by virtue of any provision of this Schedule, be treated for the purposes of sections 152 to 154 of the Gains Act as having applied the whole or any part of the consideration for any disposal—
(a) in acquiring the asset or interest by virtue of the relevant transfer; or
(b) in acquiring the asset or interest as postulated in sub-paragraph (1)(a) above, if the predecessor has made a claim under section 152 or 153 of that Act in respect of his acquisition of the asset or interest.
(5) Without prejudice to paragraph 1(4)(b) above, expressions used in sub-paragraph (2) above and in section 154 of the Gains Act have the same meaning in that sub-paragraph as they have in that section.
7 (1) Sub-paragraph (2) below applies to any disposal effected pursuant to an obligation imposed by a section 85 transfer scheme by virtue of section 91(1)(c) of the [1993 c. 43.] Railways Act 1993 (obligations to enter into agreements or execute instruments) if the person making the disposal is—
(a) the Board,
(b) a wholly owned subsidiary of the Board,
(c) a publicly owned railway company, or
(d) a company which is wholly owned by the Franchising Director,
and the person to whom the disposal is made is either a person falling within paragraphs (a) to (d) above or the Franchising Director.
(2) A disposal to which this sub-paragraph applies shall be taken for the purposes of corporation tax on chargeable gains, in relation to the person to whom the disposal is made as well as the person making the disposal, to be effected for a consideration such that no gain or loss accrues to the person making the disposal.
(3) Section 171(1) of the Gains Act (transfers within a group) shall not apply where the disposal in question is one to which sub-paragraph (2) above applies.
(4) Section 17 of that Act (disposals and acquisitions treated as made at market value) shall not have effect in relation to a disposal or the corresponding acquisition if—
(a) the disposal is effected pursuant to an obligation imposed by a section 85 transfer scheme by virtue of section 91(1)(c) of the [1993 c. 43.] Railways Act 1993,
(b) the person making the disposal is either a person falling within paragraphs (a) to (d) of sub-paragraph (1) above or the Franchising Director, and
(c) the person making the corresponding acquisition is neither a person falling within those paragraphs nor the Franchising Director,
unless the person making the disposal is connected with the person to whom the disposal is made.
(5) In this paragraph, “the corresponding acquisition”, in the case of any disposal, means the acquisition made by the person to whom the disposal is made.
8 (1) For the purposes of section 179 of the Gains Act (company ceasing to be a member of a group), where any company (“the degrouped company”) ceases, by virtue of a qualifying transaction, to be a member of a group of companies, the degrouped company shall not, by virtue of that qualifying transaction, be treated under that section as having sold, and immediately reacquired, any asset acquired from a company which was at the time of acquisition a member of that group.
(2) Where sub-paragraph (1) above applies in relation to any asset, section 179 of the Gains Act shall have effect on the first subsequent occasion on which the degrouped company ceases to be a member of a group of companies (the “subsequent group”), otherwise than by virtue of a qualifying transaction, as if both the degrouped company and the company from which the asset was acquired had been members of the subsequent group at the time of acquisition.
(3) Where, disregarding any preparatory transactions, a company would be regarded for the purposes of section 179 of the Gains Act (and, accordingly, of this paragraph) as ceasing to be, or becoming, a member of a group of companies by virtue of a qualifying transaction, it shall be regarded for those purposes as so doing by virtue of the qualifying transaction and not by virtue of any preparatory transactions.
(4) In this paragraph—
“preparatory transaction” means anything done under or by virtue of Part II of the Railways Act 1993 for the purpose of initiating, advancing or facilitating the qualifying transaction in question;
“qualifying transaction” means—
a relevant transfer;
any other transfer or disposal under or by virtue of section 85, 88(6) or (7) or 89 of the Railways Act 1993.
(5) Expressions used in this paragraph and in section 179 of the Gains Act have the same meaning in this paragraph as they have in that section.
9 (1) Where by virtue of any relevant transfer—
(a) any debt owed to the predecessor is transferred to the transferee, and
(b) the predecessor would, apart from this sub-paragraph, be the original creditor in relation to that debt for the purposes of section 251 of the Gains Act (disposal of debts),
that Act shall have effect as if the transferee and not the predecessor were the original creditor for those purposes.
(2) Where, by virtue of any relevant transfer, any obligations of the predecessor under a guarantee of the repayment of a loan are transferred to the transferee, the transferee shall be treated for the purposes of section 253(4) of the Gains Act (relief for guarantors) as a person who gave the guarantee.
(3) In any case where—
(a) by virtue of any relevant transfer, a debt owed to the predecessor is transferred to the transferee,
(b) that debt is either—
(i) a right to the repayment of any amount outstanding as principal on a loan which is a qualifying loan for the purposes of either of sections 253 and 254 of the Gains Act (relief for irrecoverable debts owed by traders and payments under guarantees), or
(ii) a right to recover any amount paid under a guarantee of the repayment of such a loan or of a loan which would be such a loan but for section 253(1)(c) of that Act (exclusion of debts not on security), and
(c) no allowable loss in respect of the amount mentioned in paragraph (b)(i) or (ii) above has been claimed by the predecessor under either of sections 253 and 254 of that Act before the coming into force of the relevant transfer,
those sections shall have effect with the modifications set out in sub-paragraph (4) below.
(4) Those modifications are—
(a) that the loan or, as the case may be, the guarantee shall be treated as if it had been made or given by the transferee, and
(b) that any payment made under the guarantee by the predecessor shall be treated as if it had been made by the transferee,
and those sections shall accordingly have effect as if there had been no assignment of the right to recover the principal of the loan or of any right to recover an amount paid under the guarantee.
(5) In any case where—
(a) a debt falling within sub-paragraph (3)(b) above is transferred by virtue of a relevant transfer, and
(b) before the coming into force of the relevant transfer, the predecessor has claimed a loss in respect of the amount mentioned in sub-paragraph (3)(b)(i) or (ii) above under section 253 or 254 of the Gains Act,
the relevant transfer shall not be treated as an assignment of the debt for the purposes of those sections and sub-paragraph (2) above shall not have effect in relation to the transferee, so far as relating to the amount mentioned in paragraph (b) above.
(6) In any case where—
(a) any right to the recovery of an amount falling within subsection (3) of section 253 of the Gains Act (relief in respect of certain irrecoverable loans) is transferred by virtue of a relevant transfer,
(b) an allowable loss determined by reference to that amount has been treated under that subsection as accruing to the predecessor, and
(c) the whole or any part of that amount is at any time recovered by the transferee or by a company in the same group of companies as the transferee,
that Act shall have effect as if a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered had accrued to the transferee or, as the case may be, to the company in the same group as the transferee.
(7) In any case where—
(a) any right to the recovery of an amount falling within subsection (4) of section 253 of the Gains Act is transferred by virtue of a relevant transfer,
(b) an allowable loss determined by reference to that amount has been treated under that subsection as accruing to the predecessor, and
(c) the whole or any part of the amount mentioned in subsection (4)(a), or the whole or any part of the amount of the payment mentioned in subsection (4)(b), of that section is at any time recovered by the transferee or by a company in the same group of companies as the transferee,
that Act shall have effect as if a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered had accrued to the transferee or, as the case may be, to the company in the same group as the transferee.
(8) In any case where—
(a) any right to recovery of the relevant outstanding amount, as defined in subsection (11) of section 254 of the Gains Act, is transferred by virtue of a relevant transfer,
(b) an allowable loss determined by reference to that amount has been treated under subsection (2) of that section (relief for debts on qualifying corporate bonds) as accruing to the predecessor, and
(c) the whole or any part of that amount is at any time recovered by the transferee or by a company in the same group of companies as the transferee,
that Act shall have effect as if a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered had accrued to the transferee or, as the case may be, to the company in the same group as the transferee.
(9) In any case where sub-paragraph (6), (7) or (8) above applies in relation to an allowable loss, subsections (7) and (8) of section 253 of the Gains Act and subsection (10) of section 254 of that Act (which deem a chargeable gain to arise where an amount treated as an allowable loss is recovered by another company in the same group) shall not apply in relation to that allowable loss.
(10) Expressions used in this paragraph and in section 253 or 254 of the Gains Act have the same meaning in this paragraph as they have in that section.
10 Schedule 2 to the Gains Act (assets held on 6th April 1965) shall have effect in relation to any assets which vest in the transferee by virtue of a relevant transfer as if—
(a) the predecessor and the transferee were the same person; and
(b) those assets, to the extent that they were in fact acquired or provided by the predecessor, were acquired or, as the case may be, provided by the transferee.
11 (1) In this paragraph, “relevant disposal” means—
(a) a disposal by virtue of a section 85 transfer scheme, other than a restructuring scheme, to the extent that the scheme provides for the transfer of property, rights and liabilities of—
(i) the Board,
(ii) a wholly owned subsidiary of the Board,
(iii) a publicly owned railway company, or
(iv) a company which is wholly owned by the Franchising Director,
to a franchise company or to the Franchising Director;
(b) a disposal pursuant to a direction under section 88(6) or (7) or 89 of the [1993 c. 43.] Railways Act 1993;
(c) a disposal by or pursuant to an agreement or instrument made or executed, transaction effected or direction given under or by virtue of paragraph 2, 3 or 14(2) of Schedule 8 to that Act, in a case where the transfer scheme in question is a section 85 transfer scheme, other than a restructuring scheme; or
(d) a disposal pursuant to a requirement imposed under paragraph 7(2)(b) of that Schedule, in a case where the transfer to which that Schedule applies is a transfer by virtue of a section 85 transfer scheme.
(2) Subject to sub-paragraph (3) below, section 17 of the Gains Act (disposals and acquisitions treated as made at market value) shall not have effect—
(a) in relation to a relevant disposal or the corresponding acquisition,
(b) in relation to an acquisition by a franchise company, in a case where the corresponding disposal is a disposal by the Franchising Director by virtue of a section 85 transfer scheme, or
(c) in relation to a disposal of a historical record or artefact in accordance with directions under section 125 of the [1993 c. 43.] Railways Act 1993 (railway heritage),
unless, in a case falling within paragraph (a) or (b) above, the person making the disposal is connected with the person making the acquisition.
(3) Where there is a relevant disposal of an asset of—
(a) the Board,
(b) a subsidiary of the Board,
(c) a publicly owned railway company, or
(d) a company wholly owned by the Franchising Director,
to the Franchising Director or a company wholly owned by the Crown, the disposal shall be taken for the purposes of the Gains Act, in relation to the person making the disposal and, if the disposal is made to a company wholly owned by the Crown, the person to whom the disposal is made, to be for a consideration such that no gain or loss accrues on the disposal.
(4) Where there is a disposal of a historical record or artefact in accordance with directions under section 125 of the [1993 c. 43.] Railways Act 1993 and the disposal is either—
(a) for a consideration not exceeding the sums which are allowable as a deduction under section 38 of the Gains Act (consideration for, and incidental costs of, original acquisition etc), or
(b) for no consideration,
the disposal shall be taken for the purposes of the Gains Act, in relation to the person to whom the disposal is made as well as the person making the disposal, to be for a consideration such that no gain or loss accrues on the disposal.
(5) In this paragraph—
“the corresponding acquisition”, in the case of any disposal, means the acquisition made by the person to whom the disposal is made;
“the corresponding disposal” in the case of any acquisition, means the disposal to the person by whom the acquisition is made.
12 (1) This paragraph applies in any case where—
(a) by virtue of a relevant transfer, any trading stock belonging to a trade carried on by the predecessor (“the predecessor’s trade”) vests in the transferee, and
(b) the trading stock is acquired by the transferee as trading stock for the purposes of a trade which he carries on or which he begins to carry on after the relevant transfer (“the transferee’s trade”).
(2) Where this paragraph applies, the trading stock in question shall, for the purposes (whether in relation to the predecessor or the transferee) of computing for the purposes of the Corporation Tax Acts the profits or gains of the predecessor’s trade and the transferee’s trade,—
(a) be taken to have been both disposed of by the predecessor and acquired by the transferee in the course of those trades and (subject to that) at the time when the transfer comes into force; and
(b) be valued in each case as if that disposal and acquisition had been for a consideration which in relation to the predecessor would have resulted in neither a profit nor a loss being brought into account in respect of the disposal in the accounting period of the predecessor which is current at that time.
(3) In this paragraph “trading stock” has the same meaning as in section 100 of the Taxes Act 1988.
13 Where, by virtue of any relevant transfer, there is transferred any right of the predecessor to receive any amount which is for the purposes of corporation tax—
(a) an amount brought into account as a trading receipt of the predecessor for any accounting period ending before the time when the transfer comes into force, or
(b) an amount falling to be so brought into account if it is assumed, where it is not the case, that the accounting period of the predecessor current on the day before the transfer comes into force ends immediately before that time,
the transfer shall not require any modification of the way in which that amount has been and is to be treated in relation to the predecessor for those purposes or entitle any amount due or paid in respect of that right to be treated as a trading receipt of the transferee for any accounting period.
14 (1) If the whole or any part of the amount of a liability transferred by virtue of a relevant transfer falls, for the purposes of corporation tax,—
(a) to be brought into account as deductible in computing the predecessor’s profits, or any description of the predecessor’s profits, for any accounting period ending before the time when the transfer comes into force, or
(b) to be so brought into account if it is assumed, where it is not the case, that the accounting period of the predecessor current on the day before the transfer comes into force ends immediately before that time,
then the transfer shall not require any modification of the way in which that amount or, as the case may be, that part of that amount has been or is to be treated in relation to the predecessor for those purposes or entitle any amount due or paid in respect of that liability or, as the case may be, the corresponding part of that liability to be deductible in computing the transferee’s profits, or any description of the transferee’s profits, for any accounting period.
(2) If and to the extent that the amount of any liability which, in consequence of any relevant transfer, falls to be discharged by the transferee is an amount which would (but for that and any other transfer) have fallen to be deductible in computing the predecessor’s profits, or any description of the predecessor’s profits, for any accounting period beginning with the coming into force of the transfer or at any subsequent time, that amount shall, to that extent,—
(a) not be so deductible; but
(b) subject to sub-paragraph (3) below, be deductible in computing the transferee’s profits to the same extent as if the transferee had become subject to the obligation in pursuance of which the liability arises or has arisen at the same time and for the same consideration, and otherwise on the same terms and in the same circumstances, as the predecessor;
and for the purposes of this sub-paragraph it shall be assumed, where it is not the case, that the accounting period of the predecessor current on the day before the transfer comes into force ends immediately before the coming into force of that transfer.
(3) For the purposes of corporation tax, where any relevant transfer has the effect that any liability falls to any extent to be discharged by the transferee instead of by the predecessor, the amounts deductible in computing the transferee’s profits, or any description of the transferee’s profits, for any accounting period shall not include any amount in respect of so much of that liability as falls to be so discharged unless it is an amount which (but for that and any other transfer) would have fallen to be deductible in computing the predecessor’s profits, or any description of the predecessor’s profits, for any accounting period beginning or ending after the coming into force of that transfer.
(4) The preceding provisions of this paragraph shall apply in relation to the deduction of charges on income against the total profits of the predecessor or transferee for any period as they apply in relation to the deduction of any amount in the computation for that period of the profits of the predecessor or, as the case may be, of the transferee.
(5) For the purposes of Chapter II of Part VI of the Taxes Act 1988 (definition of distributions), where in the case of any relevant transfer any consideration given or treated as given in respect of a security relating to—
(a) any liability, or
(b) the use of the principal to which any liability, being a liability to interest or an equivalent liability, relates,
would fall (apart from this sub-paragraph) to be regarded for those purposes as new consideration received by the predecessor, that consideration shall be treated instead, to the extent that it relates to so much of the liability as falls in consequence of the transfer to be discharged by the transferee, as if it were new consideration received by the transferee.
Finance Act 1994