The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007

PART 2 U.K. AMENDMENTS OF ICTA

11.  ICTA M1 is amended as follows. U.K.

Marginal Citations

M1 1988 c. 1.

Exempt distributions U.K.

12.  After section 209(1) (meaning of “distribution”) M2 insert—

“(1A) If a company making a distribution as part of a merger to which section 140E or section 140F M3 of the 1992 Act (cross-border mergers) applies ceases to exist in the course of the merger (without being wound up), the distribution shall be treated for the purposes of subsection (1) as a distribution in respect of share capital in a winding up.”.

Marginal Citations

M2 Section 209(1) was amended by section 40 of the Finance Act 2000.

M3 Section 140F is inserted by paragraph 2 of Schedule 2 to these Regulations.

13.  After section 213 (exempt distributions) insert— U.K.

“213A.    Exempt distributions: division of business

(1) A reference in the Corporation Tax Acts to distributions of a company shall not apply to a distribution if—

(a) it is a distribution consisting of—

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

(ii) the issue of shares by the transferee company or companies to the members of the distributing company, and

(b) the requirements of either section 140A(1A) of the 1992 Act (division of UK business) or section 140C(1A) of that Act (division of non-UK business) are satisfied in relation to the distribution.

(2) A distribution to which this section applies is an “exempt distribution” for the purposes of sections 214 to 217.

(3) The expression “relevant company” in sections 214 to 217 includes the distributing company and the transferee company or companies.”.

14.  In section 218(1) (interpretation of sections 213 to 217)— U.K.

(a) for the definitions of “distributing company” and “exempt distribution” substitute—

““distributing company” means a company to which section 213(3)(b) or 213A(1)(a) applies;

“exempt distribution” means a distribution falling within section 213(2) or 213A;”, and

(b) for the definition of “relevant company” substitute—

““relevant company” means a company falling within section 213(3) or 213A(3);”.