Chapter 11: Transfer of business or trade
Section 817: Overview of Chapter
2139.This section introduces the rules that allow transfers of intangible fixed assets to be made on a tax-neutral or other tax advantageous basis when they are made as part of certain transfers of businesses. It is new.
2140.The purpose of these rules is to ensure continuity or consistency of treatment where those assets change hands in the course of genuine commercial business reorganisations.
2141.Subsection (2) gives a signpost to provisions dealing with the “genuine commercial transaction requirement”. This requirement limits the application of the reliefs under this Chapter to cases where the transfer is not motivated by tax avoidance.
Section 818: Company reconstruction involving transfer of business
2142.Where there are certain transfers of a business (or part of a business) as part of a company reconstruction, this section allows the tax-neutral transfer of intangible fixed assets that are within the intangible fixed asset rules. It is based on paragraph 84 of Schedule 29 to FA 2002.
2143.A “tax-neutral transfer” is defined in section 776.
Section 819: European cross-border transfers of business: introduction
2144.This section introduces the rule in section 820 providing for the tax-neutral transfer of assets in the case of certain European cross-border transfers of business and states the main conditions for it to apply. It is based on paragraph 85 of Schedule 29 to FA 2002.
Section 820: Transfer of assets on European cross-border transfer of business
2145.This section provides for the tax-neutral transfer of assets in the case of certain European cross-border transfers of business. It is based on paragraph 85 of Schedule 29 to FA 2002.
Section 821: European cross-border mergers: introduction
2146.This section introduces the rule in section 822 providing for the tax-neutral transfer of assets in the case of certain European cross-border mergers and states the main conditions for it to apply. It is based on paragraph 85A of Schedule 29 to FA 2002.
Section 822: Transfer of assets on European cross-border merger
2147.This section provides for the tax-neutral transfer of assets in the case of certain European cross-border mergers. It is based on paragraph 85A of Schedule 29 to FA 2002.
Section 823: Interpretation of sections 821 and 822
2148.This section gives rules of interpretation relevant to the two preceding sections. It is based on paragraph 85A of Schedule 29 to FA 2002.
Section 824: Transfer of business of building society to company
2149.This section allows the tax-neutral transfer of intangible fixed assets within the intangible fixed assets rules when the business of a building society is transferred to a company. It is based on paragraph 90 of Schedule 29 to FA 2002.
Section 825: Application of sections 780 and 785 where transfer within section 824 occurs
2150.This section relaxes certain degrouping rules in Chapter 9 of this Part on the transfer of a building society’s business to a company. It is based on paragraph 90 of Schedule 29 to FA 2002.
Section 826: Amalgamation of, or transfer of engagements by, certain societies
2151.This section allows the tax-neutral transfer between certain societies of intangible fixed assets within the intangible fixed assets rules when the transfer is part of an amalgamation of the societies or when the whole or a part of the business of one society is transferred to the other (“a transfer of engagements”). It is based on paragraph 91 of Schedule 29 to FA 2002.
Section 827: Claims to postpone charge on transfer
2152.This section sets out the circumstances under which a charge under this Part can be postponed when a trade is transferred to a non-UK resident company. It is based on paragraph 86 of Schedule 29 to FA 2002.
Section 828: Relief on transfer
2153.This section sets out the effect of the section 827 postponement of charge. It is based on paragraph 86 of Schedule 29 to FA 2002.
Section 829: Charge on subsequent realisations
2154.This section provides for a whole or partial reinstatement of the charge postponed under 827. It is based on paragraph 86 of Schedule 29 to FA 2002.
Section 830: Exclusion from section 829 of group transfers
2155.This section allows transfers, subsequent to the transfer of the trade under 827, of assets between group members without triggering the reinstatement rules in section 829. It is based on paragraph 86 of Schedule 29 to FA 2002.
Section 831: The genuine commercial transaction requirement and clearance
2156.This section states the genuine commercial transaction conditions and provides for an advance clearance procedure in respect of it. It is based on paragraph 84 of Schedule 29 to FA 2002.
2157.Many of the relieving provisions in Part 11 of Schedule 29 to FA 2002 are conditional on the transactions involved not having an avoidance purpose. And to provide certainty to those contemplating a transaction they provide for an advance clearance application. In the source legislation these matters are repeated in each relieving provision to which they apply. Rather than rewrite the same condition and clearance as part of each of the sections to which they apply, they are rewritten only once, in this section, and applied, where appropriate, by reference, in the sections to which they are relevant, to the “genuine commercial transaction requirement”.
2158.Subsection (3) defines the “appropriate applicant” referred to in subsection (2). The source legislation defines in each relevant paragraph who should make the clearance application. Rewriting the clearance rule only once (as described in the previous paragraph) necessitates identification of the appropriate applicant depending on the transaction in respect of which the application is to be made.
Section 832: Procedure on application for clearance
2159.This section deals with procedural matters in respect of the clearance application under the previous section. It is based on paragraph 88 of Schedule 29 to FA 2002.
Section 833: Decision on application for clearance
2160.This section deals with the outcome of a clearance application under section 831. It is based on paragraph 88 of Schedule 29 to FA 2002.