(1)Subject to the following provisions of this section—
(a)section 178 has effect where the chargeable company referred to in section 178(4) ceases to be a member of the group in an accounting period beginning after 5th April 1992, but shall not apply where section 179 has effect, and
(b)section 179 has effect where the accounting period in which the chargeable company referred to in section 179(5) ceases to be a member of the group ends after such day as the Treasury by order appoint,
and in any case where section 178 or section 179 has effect in respect of tax for any accounting period, that section shall also have effect in respect of tax for earlier accounting periods, to the exclusion of the corresponding enactments repealed by this Act.
(2)Subject to subsection (1) above—
(a)section 178(5) to (7) apply where a company which apart from section 278(3C) of the [1970 c. 10.] Income and Corporation Taxes Act 1970 would by virtue of subsection (3) of that section have been treated as selling an asset (unless it has already been treated, by virtue of section 278(3C), as if it had sold the asset in question), and
(b)section 179(6) to (9) apply where a company which, apart from section 278(3C) of the [1970 c. 10.] Income and Corporation Taxes Act 1970 or section 178(4) of this Act, would by virtue of section 278(3) or section 178(3) have been treated as selling an asset (unless it has already been treated, by virtue of section 278(3C) or section 178(4), as if it had sold the asset in question).
(3)Where by virtue of section 138(8) of the [1989 c. 26.] Finance Act 1989 a company which, by virtue of the substitution of the new definition for the old definition, ceased to be a member of a group at the beginning of 14th March 1989 was not treated as selling an asset at any time unless the conditions in section 138(9) became satisfied, then that company shall continue not to be treated as selling the asset at that time unless the conditions in subsection (4) below become satisfied, assuming for that purpose that the old definition applies.
(4)Those conditions are—
(a)that for the purposes of section 178 or 179 the company in question ceases at any time (“the relevant time”) to be a member of the group referred to in subsection (3) above,
(b)that, at the relevant time, the company in question, or an associated company also leaving that group at that time, owns otherwise than as trading stock the asset or property to which a chargeable gain has been carried forward from the asset on a replacement of business assets, and
(c)that the time of acquisition referred to in section 178(1) or 179(1) fell within the period of 6 years ending with the relevant time.
(5)Where, under any compromise or arrangement agreed to on any date before 14th March 1989 in pursuance of section 425 of the [1985 c. 6.] Companies Act 1985 and sanctioned by the court, one company acquires at any time, directly or indirectly, an interest in ordinary share capital of another company and immediately after that time—
(a)under the old definition the 2 companies are, by virtue of that acquisition, members of a group for the purposes of the group provisions, but
(b)the second company is not an effective 51 per cent. subsidiary of the first company,
subsection (6) below applies; and in that subsection those companies and any other members of the group are referred to as “relevant companies”.
(6)In respect of the period beginning with the time of acquisition and ending with—
(a)the expiry of the 6 months beginning with the date of the agreement, or
(b)if earlier, the date when, under the old definition, the other company ceases for the purposes of the group provisions to be a member of the group referred to in subsection (5)(a) above,
the old definition shall apply in relation to the relevant companies for the purposes of the group provisions and, in relation to those companies, the reference in subsection (3) above to 14th March 1989 shall be read as a reference to the day following the end of that period.
(7)In subsections (3) to (6) above—
“arrangement” has the same meaning as in section 425 of the [1985 c. 6.] Companies Act 1985,
“effective 51 per cent. subsidiary” has the meaning given by section 170(7);
“group provisions” means sections 170 to 181 (excluding subsections (3) to (6) above);
“the new definition” means section 170; and
“the old definition” means section 272 of the [1970 c. 10.] Income and Corporation Taxes Act 1970 as it had effect on 13th March 1989,
and section 178(8) or 179(10) shall apply for the purposes of those subsections.