Corporation Tax Act 2010 (c. 4)

Part 23 U.K. Company distributions

Chapter 5 U.K. Demergers

Exempt distributions U.K.

1075 Exempt distributions U.K.

(1) An exempt distribution is not a distribution of a company for the purposes of the Corporation Tax Acts.

(2) In this Chapter “exempt distribution” means a distribution which is an exempt distribution by virtue of section 1076, 1077 or 1078.

1076 Transfer of shares in subsidiaries to members U.K.

A distribution is an exempt distribution if—

(a) it consists of the transfer by a company to all or any of its members of shares in one or more companies which are its 75% subsidiaries,

(b) each of conditions A to F in sections 1081 and 1082 is met in respect of the distribution, and

(c) if the company making the transfer is a 75% subsidiary of another company, conditions L and M in section 1085 are met in respect of the distribution.

1077 Transfer by distributing company and issue of shares by transferee company U.K.

(1) This section applies to a distribution which consists of both of the following—

(a) the transfer by a company to one or more other companies (“the transferee company or companies”) of—

(i) a trade or trades, or

(ii) shares in one or more companies which are 75% subsidiaries of the company making the transfer, and

(b) the issue of shares by the transferee company or companies to all or any of the members of the company making the transfer.

(2) A distribution to which this section applies is an exempt distribution if—

(a) each of conditions A to D in section 1081 and each of conditions G to K in section 1083 is met in respect of the distribution, and

(b) if the company making the transfer is a 75% subsidiary of another company, conditions L and M in section 1085 are met in respect of the distribution.

1078 Division of business in a cross-border transfer U.K.

(1) This section applies to a distribution which consists of—

(a) the transfer of part of a business by a company to one or more other companies (“the transferee company or companies”), and

(b) the issue of shares by the transferee company or companies to the members of the company making the transfer.

(2) A distribution to which this section applies is an exempt distribution if either—

(a) each of the tests in paragraphs (a) to (f) of section 140A(1A) of TCGA 1992 (cross-border transfers: division of UK business) is met in relation to it, or

(b) each of the tests in paragraphs (a) to (e) of section 140C(1A) of TCGA 1992 (cross-border transfers: division of non-UK business) is met in relation to it.

1079 “The distributing company” U.K.

References in this Chapter to the distributing company are—

(a) in the case of a distribution falling within paragraph (a) of section 1076, to the company that makes the transfer of shares mentioned in that paragraph,

(b) in the case of a distribution falling within section 1077(1), to the company that makes the transfer mentioned in section 1077(1)(a), and

(c) in the case of a distribution falling within section 1078(1), to the company that makes the transfer of part of a business mentioned in section 1078(1)(a).

1080 Meaning of “relevant company” U.K.

(1) This section gives the meaning of “relevant company” in this Chapter.

(2) In the case of a distribution falling within section 1076(a) the relevant companies are—

(a) the distributing company, and

(b) each subsidiary whose shares are transferred as mentioned in section 1076(a).

(3) In the case of a distribution falling within section 1077(1), the relevant companies are—

(a) the distributing company,

(b) each transferee company mentioned in section 1077(1)(a), and

(c) each subsidiary whose shares are transferred as mentioned in section 1077(1)(a)(ii).

(4) In the case of a distribution falling within section 1078(1), the relevant companies are—

(a) the distributing company, and

(b) each transferee company mentioned in section 1078(1)(a).