Finance Act 1990

70 Transfer of United Kingdom branch or agency. U.K.

(1) After section 273 of the Taxes Act 1970 there shall be inserted—

“273A Transfer of United Kingdom branch or agency.

(1) Subject to subsections (3) and (4) below, subsection (2) below applies for the purposes of corporation tax on chargeable gains where—

(a) there is a scheme for the transfer by a company (“company A”)—

(i) which is not resident in the United Kingdom, but

(ii) which carries on a trade in the United Kingdom through a branch or agency,

of the whole or part of the trade to a company resident in the United Kingdom (“company B”),

(b) company A disposes of an asset to company B in accordance with the scheme at a time when the two companies are members of the same group, and

(c) a claim in relation to the asset is made by the two companies within two years after the end of the accounting period of company B during which the disposal is made.

(2) Where this subsection applies—

(a) company A and company B shall be treated as if the asset were acquired by company B for a consideration of such amount as would secure that neither a gain nor a loss would accrue to company A on the disposal, and

(b) section 127(3) of the Finance Act 1989 shall not apply to the asset by reason of the transfer.

(3) Subsection (2) above does not apply where—

(a) company B, though resident in the United Kingdom,—

(i) is regarded for the purposes of any double taxation arrangements having effect by virtue of section 788 of the Taxes Act 1988 as resident in a territory outside the United Kingdom, and

(ii) by virtue of the arrangements would not be liable in the United Kingdom to tax on a gain arising on a disposal of the asset occurring immediately after its acquisition, or

(b) company B is—

(i) a dual resident investing company, within the meaning of section 404 of the Taxes Act 1988, or

(ii) an investment trust, within the meaning of section 842 of that Act.

(4) Subsection (2) above shall not apply unless any gain accruing to company A—

(a) on the disposal of the asset in accordance with the scheme, or

(b) where that disposal occurs after the transfer has taken place, on a disposal of the asset immediately before the transfer,

would be a chargeable gain and would, by virtue of section 11(2)(b) of the Taxes Act 1988, form part of its profits for corporation tax purposes.

(5) In this section “company” and “group” have the meanings which would be given by section 272 above if subsections (1)(a) and (2) of that section were omitted.”

(2) In section 272(1) of the Taxes Act 1970—

(a) for the word “For” there shall be substituted the words “Except as otherwise provided, for”, and

(b) the words “, subject to section 280(7) below,” shall be omitted.

(3) In section 275 of that Act for subsection (1) there shall be substituted—

“(1) Where there is a disposal of an asset acquired in relevant circumstances, section 34 of the Capital Gains Tax Act 1979 (restriction of losses by reference to capital allowances) shall apply in relation to capital allowances made to the person from which it was acquired (so far as not taken into account in relation to a disposal of the asset by that person), and so on as respects previous transfers of the asset in relevant circumstances.

(1A) In subsection (1)

above “relevant circumstances” means circumstances in which section 273 or 273A above applied or in which section 273 above would have applied but for subsection (2) of that section.

(1B) Subsection (1)

above shall not be taken as affecting the consideration for which an asset is deemed under section 273 or 273A to be acquired.”

(4) In section 281(2) of that Act, after the words “section 273” there shall be inserted the words “or 273A”.

F1 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) In paragraph 10(2)(c) of Schedule 13 to the M1 Finance Act 1984, after the words “section 273(1)” there shall be inserted the words “or 273A”.

(7) In—

(a) section 68(7A)(b) of the M2 Finance Act 1985, and

(b) paragraph 1(3)(b) of Schedule 8 to the M3 Finance Act 1988,

after “273,” there shall be inserted “273A,”.

(8) In paragraph 5 of Schedule 11 to the Finance Act 1988—

(a) for the words “of the Taxes Act 1970 (which treats” there shall be substituted the words “or 273A of the Taxes Act 1970 (which treat”, and

(b) for the words “section 273(1)”, in the second place where they occur, there shall be substituted the words “either of those sections”.

(9) This section shall apply to disposals on or after 20th March 1990.

Textual Amendments

F1 S. 70(5) repealed(where trustees become neither resident nor ordinarily resident in the United Kingdom on or after 19.03.1991) by Finance Act 1991 (c. 31, SIF 63:2), ss. 92(5), 123, Sch. 19 Pt.VI Note 4.

Marginal Citations

M1 1984 c. 43.

M2 1985 c. 54.

M3 1988 c. 39.