Income and Corporation Taxes Act 1988

[F1 768C Deductions: asset transferred within group. U.K.

(1) This section applies where—

(a) there is a change in the ownership of [F2 a company with investment business] (“the relevant company”);

(b) none of paragraphs (a) to (c) of section 768B(1) applies;

(c) after the change in the ownership the relevant company acquires an asset from another company in circumstances such that section 171(1) of the 1992 Act applies to the acquisition; and

(d) a chargeable gain (“a relevant gain”) accrues to the relevant company on a disposal of the asset within the period of three years beginning with the change in the ownership.

(2) For the purposes of subsection (1)(d) above an asset acquired by the relevant company as mentioned in subsection (1)(c) above shall be treated as the same as an asset owned at a later time by that company if the value of the second asset is derived in whole or in part from the first asset, and in particular where the second asset is a freehold and the first asset was a leasehold and the lessee has acquired the reversion.

(3) For the purposes of this section—

(a) the accounting period of the relevant company in which the change in the ownership occurs shall be divided into two parts, the first the part ending with the change, the second the part after;

(b) those parts shall be treated as two separate accounting periods; and

(c) the amounts in issue for the accounting period being divided shall be apportioned to those parts.

(4) In Schedule 28A—

(a) Part V shall have effect for identifying the amounts in issue for the accounting period being divided; and

(b) Part VI shall have effect for the purpose of apportioning those amounts to the parts of that accounting period.

(5) Subsections (6) to (8) of section 768B shall apply in relation to the relevant company as they apply in relation to the company mentioned in subsection (1) of that section except that any reference in those subsections to Part III of Schedule 28A shall be read as a reference to Part VI of that Schedule.

(6) Subsections (7) and (9) below apply only where, in accordance with the relevant provisions of the 1992 Act and Part VI of Schedule 28A, an amount is included in respect of chargeable gains in the total profits for the accounting period of the relevant company in which the relevant gain accrues.

(7) In computing the total profits of the relevant company for the accounting period in which the relevant gain accrues, no deduction shall be made under [F3 section 1219 of CTA 2009 (expenses of management of a company's investment business)] by reference to—

(a) [F4 expenses of management deductible] or allowances falling to be made for an accounting period of the relevant company beginning before the change in ownership, or

(b) charges paid in such an accounting period,

from an amount of the total profits equal to the amount which represents the relevant gain.

(8) For the purposes of this section, the amount of the total profits for an accounting period which represents the relevant gain is—

(a) where the amount of the relevant gain does not exceed the amount which is included in respect of chargeable gains for that period, an amount equal to the amount of the relevant gain;

(b) where the amount of the relevant gain exceeds the amount which is included in respect of chargeable gains for that period, the amount so included.

[F5 (9) Part IV of Schedule 28A shall have effect for the purpose of restricting, in a case where this section applies, the debits F6 . . . to be brought into account for the purposes of [F7 Part 5 of CTA 2009] (loan relationships) in respect of the relevant company’s loan relationships [F8 (including debits so brought into account by virtue of [F9 section 574 of that Act])][F10 and the non-trading deficits in respect of those relationships that may be carried forward].]

(11) Subsections (8) and (9) of section 768 shall apply for the purposes of this section as they apply for the purposes of that section.

(12) In this section—

• “the relevant provisions of the 1992 Act” means section 8(1) of and Schedule 7A to that Act; and

• [F11 “company with investment business” has the [F12 meaning given by section 1218 of CTA 2009].]

[F13 (13) This section applies in relation to an asset to which [F14 Part 8 of CTA 2009] applies (intangible fixed assets), with the following adaptations—

(a) for the reference to section 171(1) of the 1992 Act substitute a reference to [F15 section 775 of CTA 2009];

(b) for any reference to a chargeable gain under [F16 the 1992 Act] substitute a reference to a chargeable realisation gain within the meaning of [F16 that Part] that is [F16 a non-trading credit for the purposes of that Part (see section 746 of that Act)];

(c) for any reference to a disposal of the asset substitute a reference to its realisation within the meaning of [F17 that Part (see section 734(1) of that Act)];

(d) for the reference to the relevant provisions of the 1992 Act substitute a reference to [F18 Chapter 6 of that Part].]]

Textual Amendments

F1 Ss. 768B, 768C inserted (with application in accordance with Sch. 26 para. 5 of the amending Act) by Finance Act 1995 (c. 4), Sch. 26 para. 2

F2 Words in s. 768C(1) substituted (with effect in accordance with ss. 42-44 of the amending Act) by Finance Act 2004 (c. 12), Sch. 6 para. 4(2)

F3 Words in s. 768C(7) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 222(2) (with Sch. 2 Pts. 1, 2)

F4 Words in s. 768C(7)(a) substituted (with effect in accordance with ss. 42-44 of the amending Act) by Finance Act 2004 (c. 12), Sch. 6 para. 4(3)

F5 S. 768C(9) substituted for s. 768C(9)(10) (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 40 (with Sch. 15)

F6 Words in s. 768C(9) repealed (1.4.2009 with effect in accordance with s. 1329(1) of the repealing Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 222(3)(a), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F7 Words in s. 768C(9) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 222(3)(b) (with Sch. 2 Pts. 1, 2)

F8 Words in s. 768C(9) inserted (with effect in accordance with s. 83(3) of the amending Act) by Finance Act 2002 (c. 23), Sch. 27 para. 10 (with Sch. 28)

F9 Words in s. 768C(9) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 222(3)(c) (with Sch. 2 Pts. 1, 2)

F10 Words in s. 768C(9) inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 222(3)(d) (with Sch. 2 Pts. 1, 2)

F11 S. 768C(12): definition substituted (with effect in accordance with ss. 42-44 of the amending Act) by Finance Act 2004 (c. 12), Sch. 6 para. 4(4)

F12 Words in s. 768C(12) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 222(4) (with Sch. 2 Pts. 1, 2)

F13 S. 768C(13) inserted (24.7.2002) by Finance Act 2002 (c. 23), Sch. 30 para. 4(2)

F14 Words in s. 768C(13) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 222(5)(a) (with Sch. 2 Pts. 1, 2)

F15 Words in s. 768C(13)(a) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 222(5)(b) (with Sch. 2 Pts. 1, 2)

F16 Words in s. 768C(13)(b) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 222(5)(c) (with Sch. 2 Pts. 1, 2)

F17 Words in s. 768C(13)(c) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 222(5)(d) (with Sch. 2 Pts. 1, 2)

F18 Words in s. 768C(13)(d) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 222(5)(e) (with Sch. 2 Pts. 1, 2)

Modifications etc. (not altering text)

C1 Ss. 768B, 768C modified (22.7.2004) by Finance Act 2004 (c. 12), s. 43(7)

C2 Ss. 767A-768E: The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), reg. 36 to be construed as one (6.4.2006) with these sections, by virtue of that reg.

C3 Ss. 768-768E modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 30