Corporation Tax Act 2009

Tax-neutral transfers U.K.

818 Company reconstruction involving transfer of business U.K.

(1) This section applies if—

(a) a scheme of reconstruction involves the transfer of the whole or part of the business of one company (“the transferor”) to another company (“the transferee”), and

(b) the transferor receives no part of the consideration for the transfer (otherwise than by the transferee taking over the whole or part of the liabilities of the business),

but see subsections (3) to (5).

(2) If the transfer includes intangible fixed assets that—

(a) are chargeable intangible assets in relation to the transferor immediately before the transfer, and

(b) are chargeable intangible assets in relation to the transferee immediately after the transfer,

the transfer of those assets is tax-neutral for the purposes of this Part.

(3) This section does not apply if the transfer is one to which section 775 (transfers within a group) applies.

(4) This section does not apply if the transferor or the transferee is—

(a) a qualifying society within the meaning of section 461A of ICTA (incorporated friendly societies entitled to exemption from tax), or

(b) a dual resident investing company within the meaning of [F1 section 949 of CTA 2010 (dual resident investing companies)].

(5) This section applies only if the reconstruction meets the genuine commercial transaction requirement (see section 831).

(6) In this section “scheme of reconstruction” has the same meaning as it has in section 136 of TCGA.

Textual Amendments

F1 Words in s. 818(4)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 655 (with Sch. 2)

819 European cross-border transfers of business: introduction U.K.

(1) Section 820 applies if—

(a) condition A or B is met, and

(b) each of the companies mentioned in subsection (2)(a) or (3)(a) makes a claim under this section,

but see section 820(2) and (3).

(2) Condition A is that—

(a) [F2 a relevant company] resident in one [F3 relevant state] transfers the whole or part of the business carried on by it in the United Kingdom to [F2 a relevant company] resident in another [F3 relevant state], and

(b) the transfer is wholly in exchange for securities issued by the transferee to the transferor.

(3) Condition B is that—

(a) [F4 a relevant company] transfers part of its business to one or more [F5 relevant companies],

(b) the transferor is resident in one [F3 relevant state],

(c) the part of the transferor's business which is transferred is carried on by the transferor in the United Kingdom,

(d) at least one transferee is resident in a [F3 relevant state] other than that in which the transferor is resident,

(e) the transferor continues to carry on a business after the transfer, and

(f) the transfer—

(i) is made in exchange for the issue of shares in or debentures of each transferee to the persons holding shares in or debentures of the transferor, or

(ii) is not so made only because, and only so far as, a transferee is prevented from so issuing such shares or debentures by section 658 of the Companies Act 2006 (c. 46) (general rule against limited company acquiring own shares) or by a corresponding provision of the law of [F6 a] [F3 relevant state] preventing such an issue.

(4) For the purposes of this Chapter, a company is resident in a [F3 relevant state] if—

(a) it is within a charge to tax under the law of the [F7 relevant state] as being resident for that purpose, and

(b) it is not regarded, for the purpose of any double taxation relief arrangements to which the [F7 relevant state] is a party, as resident in a territory not within a [F3 relevant state].

(5) In this section and section 820—

(a) “company” means any entity listed as a company in [F8 Part A of Annex I] to the Mergers Directive,

[F9 (ba) “relevant company” means a body incorporated under the law of a relevant state,

(bb) “relevant state” means the United Kingdom or a member State,]

(c) “securities” includes shares,

(d) “transferee” has the same meaning as in subsection (2) or (3), and

(e) “the transferor” has the same meaning as in subsection (2) or (3).

Textual Amendments

F2 Words in s. 819(2) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(17)(a) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F3 Words in s. 819(2)-(4) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(17)(b) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F4 Words in s. 819(3) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(17)(a) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F5 Words in s. 819(3)(a) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(17)(c) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F6 Word in s. 819(3)(f)(ii) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(17)(d) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F7 Words in s. 819(4) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(17)(e) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F8 Words in s. 819(5)(a) substituted (1.7.2011) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2011 (S.I. 2011/1431), regs. 1(2), 4(6)

F9 S. 819(5)(ba)(bb) substituted for s. 819(5)(b) (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(17)(f) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

820 Transfer of assets on European cross-border transfer of business U.K.

(1) If the transfer of business includes intangible fixed assets that—

(a) are chargeable intangible assets in relation to the transferor immediately before the transfer, and

(b) are chargeable intangible assets in relation to the transferee immediately after the transfer,

the transfer of those assets is tax-neutral for the purposes of this Part.

(2) This section applies only if the transfer of the business or part meets the genuine commercial transaction requirement (see section 831).

(3) This section does not apply if the transferor is a transparent entity.

(4) In this section—

• “the transfer of business” means the transfer of business mentioned in section 819(2)(a) or (3)(a), and

• “transparent entity” means a company which is resident in a member State F10 ... and does not have an ordinary share capital.

(5) For the purposes of subsection (4) an entity is resident in a [F11 relevant state] if—

(a) it is within a charge to tax under the law of the [F12 relevant state] as being resident for that purpose, and

(b) it is not regarded, for the purposes of any double taxation relief arrangements to which the [F12 relevant state] is a party, as resident in a territory not within a [F11 relevant state].

Textual Amendments

F10 Words in s. 820(4) omitted (31.12.2020) by virtue of The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(18)(a) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F11 Words in s. 820(5) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(18)(b)(i) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F12 Words in s. 820(5) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(18)(b)(ii) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

821 European cross-border mergers: introduction U.K.

(1) Section 822 applies if the following conditions are met in the case of any merger—

(a) conditions A, B and C,

(b) in the case of a merger within subsection (2)(a), (b) or (c), condition D, and

(c) in the case of a merger within subsection (2)(c) or (d), condition E,

but see section 822(3) to (5)).

(2) Condition A is that—

(a) an SE is formed by the merger of two or more companies in accordance with Articles 2(1) and 17(2)(a) or (b) of Council Regulation (EC) No. 2157/2001 on the Statute for a European company (Societas Europaea),

(b) an SCE is formed by the merger of two or more co-operative societies, at least one of which is a society registered under [F13 the Co-operative and Community Benefit Societies Act 2014], in accordance with Articles 2(1) and 19 of Council Regulation (EC) No. 1435/2003 on the Statute for a European Co-operative Society (SCE),

(c) a merger is effected by the transfer by one or more companies of all their assets and liabilities to a single existing company, or

(d) a merger is effected by the transfer by two or more companies of all their assets and liabilities to a single new company (other than an SE or an SCE) in exchange for the issue by the transferee, to each person holding shares in or debentures of a transferor, of shares or debentures.

(3) Condition B is that each merging company is resident in a [F14 relevant state].

(4) Condition C is that the merging companies are not all resident in the same [F15 relevant state].

(5) Condition D is that—

(a) the transfer of assets and liabilities to the transferee in the course of the merger is made in exchange for the issue of shares or debentures by the transferee to each person holding shares in or debentures of a transferor, or

(b) that transfer of those assets and liabilities is not so made only because, and only so far as, a transferee is prevented from so issuing such shares or debentures by section 658 of the Companies Act 2006 (c. 46) (general rule against limited company acquiring own shares) or by a corresponding provision of the law of [F16 a] member State preventing such an issue.

(6) Condition E is that in the course of the merger each transferor ceases to exist without being in liquidation (within the meaning given by section 247 of the Insolvency Act 1986 (c. 45)).

(7) For the meaning of expressions used in this section, see section 823.

Textual Amendments

F13 Words in Act substituted (1.8.2014) by virtue of Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 142 (with Sch. 5)

F14 Words in s. 821(3) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(19)(a) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F15 Words in s. 821(4) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(19)(b) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F16 Word in s. 821(5)(b) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(19)(c) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

822 Transfer of assets on European cross-border merger U.K.

(1) If this section applies, the transfer of qualifying assets in the course of the merger is tax-neutral for the purposes of this Part.

(2) For the purposes of this section an asset is a qualifying asset if—

(a) it is a chargeable intangible asset in relation to the transferor immediately before the transfer, and

(b) it is a chargeable intangible asset in relation to the transferee immediately after the transfer.

(3) This section does not apply if section 818 (company reconstruction involving transfer of business) applies to any qualifying assets transferred in the course of the merger.

(4) This section does not apply if—

(a) one or more of the merging companies is a transparent entity, and

(b) the assets and liabilities of a transparent entity are transferred to another company in the course of the merger.

(5) This section applies only if the merger meets the genuine commercial transaction requirement (see section 831).

(6) For the meaning of expressions used in this section, see section 823.

823 Interpretation of sections 821 and 822 U.K.

(1) This section applies for the interpretation of sections 821 and 822 and this section.

[F17 (1A) “Relevant state” means the United Kingdom or a member State.]

(2) “Transferor” means—

(a) in relation to a merger within section 821(2)(a), a company merging to form the SE,

(b) in relation to a merger within section 821(2)(b), a co-operative society merging to form the SCE, and

(c) in relation to a merger within section 821(2)(c) or (d), each company transferring all its assets and liabilities.

(3) “Transferee” means—

(a) in relation to a merger within section 821(2)(a), the SE,

(b) in relation to a merger within section 821(2)(b), the SCE, and

(c) in relation to a merger within section 821(2)(c) or (d), the company to which assets and liabilities are transferred.

(4) “Transparent entity” has the meaning given in section 820(4).

(5) References to a company are references to any entity listed as a company in [F18 Part A of Annex I] to the Mergers Directive.

(6) In section 821 and this section “co-operative society” means a society registered under [F13 the Co-operative and Community Benefit Societies Act 2014] or a similar society governed by the law of a member State F19 ....

Textual Amendments

F13 Words in Act substituted (1.8.2014) by virtue of Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 142 (with Sch. 5)

F17 S. 823(1A) inserted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(20)(a) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F18 Words in s. 823(5) substituted (1.7.2011) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2011 (S.I. 2011/1431), regs. 1(2), 4(7)

F19 Words in s. 823(6) omitted (31.12.2020) by virtue of The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(20)(b) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

824 Transfer of business of building society to company U.K.

(1) This section applies if—

(a) there is a transfer of the whole of a building society's business to a company (“the successor company”) in accordance with section 97 and the other applicable provisions of the Building Societies Act 1986 (c. 53),

(b) the transfer includes intangible fixed assets,

(c) those assets are chargeable intangible assets in relation to the society immediately before the transfer, and

(d) those assets are chargeable intangible assets in relation to the successor company immediately after the transfer.

(2) The transfer of those assets is tax-neutral for the purposes of this Part.

(3) For the application of sections 780 and 785 in cases where this section applies, see section 825.

(4) In that section “the successor company” has the same meaning as in this section.

825 Application of sections 780 and 785 where transfer within section 824 occurs U.K.

(1) This section deals with the application of—

(a) section 780 (deemed realisation and reacquisition at market value), and

(b) section 785 (principal company becoming member of another group),

where there is a transfer within section 824.

(2) If, because of the transfer, a company ceases to be a member of the same group as the building society, that event does not cause section 780 or 785 to apply as respects any asset acquired by the company from the building society or any other member of the same group.

(3) If the building society and the successor company are members of the same group at the time of the transfer but later cease to be, that later event does not cause section 780 or 785 to apply to any asset to which this subsection applies.

(4) Subsection (3) applies to—

(a) any asset acquired by the successor company on or before the transfer from the building society or any other member of that same group, or

(b) any asset acquired from the building society or any other member of that group by a company other than the successor company that is a member of that group at the time of the transfer.

(5) Subsection (6) applies if a company which is a member of the same group as the building society at the time of the transfer—

(a) ceases to be a member of that group and becomes a member of the same group as the successor company, and

(b) later ceases to be a member of that group.

(6) Section 780 applies on that later event as if any asset to which this subsection applies that has not been acquired from the successor company had been so acquired.

(7) Subsection (6) applies to—

(a) any asset acquired by the company from the building society when the company and the building society were members of the same group, or

(b) any asset acquired by the company from another company which is a member of the same group at the time of the transfer, when the company, the building society and the other company, were members of the same group.

(8) Subsection (6) does not apply if—

(a) the company which acquired the asset is a 75% subsidiary of the company from which it was acquired, or vice versa,

(b) those companies cease simultaneously to be members of the same group as the successor company, and

(c) those companies continue to be members of the same group as one another.

826 Amalgamation of, or transfer of engagements by, certain societies U.K.

(1) This section applies if—

(a) two or more societies to which this section applies amalgamate or there is a transfer of engagements from one such society to another,

(b) in the course of the amalgamation or transfer of engagements or as part of it intangible fixed assets are transferred from one society (“the transferor”) to another (“the transferee”),

(c) those assets are chargeable intangible assets in relation to the transferor immediately before the transfer, and

(d) those assets are chargeable intangible assets in relation to the transferee immediately after the transfer.

(2) The transfer of those assets is tax-neutral for the purposes of this Part.

(3) This section applies to—

(a) a building society,

(b) a [F20 registered society], and

(c) a co-operative association in relation to which [F21 section 1057 of CTA 2010 (UK agricultural or fishing co-operatives) applies.]

Textual Amendments

F20 Words in Act substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 141 (with Sch. 5)

F21 Words in s. 826(3)(c) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 656 (with Sch. 2)