Chapter 9: European cross-border transfers of business
Overview
1879.This Chapter gives the rules that apply for derivative contracts in the case of cross-border transfers within the European Community of the whole or part of a business carried on in the United Kingdom.
Section 674: Introduction to Chapter
1880.This section sets out the two conditions required for the Chapter to apply together with the claim requirement. It is based on paragraphs 30D(1), (2), (3) and (4), 30G(1) and 30I(1) of Schedule 26 to FA 2002.
1881.The source legislation for subsection (2)(c) requires that the transferee is resident in the United Kingdom or within the corporation tax charge in section 11 of ICTA. The subsection says “within the charge to corporation tax” as the result is the same.
1882.See also the paragraph headed “references to Companies Act 2006” in Part 10 of Schedule 2 which provides for the interpretation of references to section 658 of that Act before that section comes into force.
Section 675: Transfer of derivative contract at notional carrying value
1883.This section provides the rule that if either of the conditions in section 674 applies, debits and credits in respect of derivative contracts which are transferred as part of the business transfer are brought into account by both transferor and transferee as if the contracts had been transferred at the carrying value in the accounts of the transferor. It is based on paragraph 30D(1), (2) and (6) of Schedule 26 to FA 2002.
1884.The definition of “notional carrying value” is the same as that used in section 625(6).
Section 676: Transferor using fair value accounting
1885.This section provides the rule to apply in place of section 675 if the transferor company uses fair value accounting. It is based on paragraph 30D(7) of Schedule 26 to FA 2002.
Section 677: Tax avoidance etc
1886.This section disapplies the Chapter if the transfer of business is not effected for genuine commercial reasons, unless the Commissioners for HMRC are satisfied, following an application, that this Chapter should apply. It is based on paragraph 30F(1) and (2) of Schedule 26 to FA 2002.
Section 678: Procedure on application for clearance
1887.This section sets out the procedure to be followed for an application that section 677 should not apply. It is based on paragraph 30F(3) of Schedule 26 to FA 2002.
1888.This section follows the procedure set out in the equivalent provision in Part 5 (loan relationships) (see section 427).
Section 679: Decision on application for clearance
1889.This section sets out how the outcome of an application that section 677 should not apply is notified. It is based on paragraph 30F(3) of Schedule 26 to FA 2002.
1890.This section follows the procedure set out in the equivalent provision in Part 5 (loan relationships) (see section 428).
Section 680: Disapplication of Chapter where transparent entities involved
1891.This section disapplies the Chapter under certain circumstances if transparent entities are involved in the transfer of business. It is based on paragraphs 30G(1) and (2) and 30I(1) of Schedule 26 to FA 2002.
Section 681: Interpretation
1892.This section defines “company” and explains what company residence in a member State means for the purposes of the Chapter. It is based on paragraph 30I of Schedule 26 to FA 2002.
