126ADemergers

1

This section applies if—

a

C (tax-exempt) disposes of an asset to a 75% subsidiary (“S”) of C (residual),

b

C (residual) disposes of its interest in S to another company (“P”),

c

on the date when it acquires the interest in S, P gives a notice under section 109 (as modified by paragraph 8 of Schedule 17) which specifies an accounting period which begins within the period of six months beginning with the date of the disposal of the asset, and

d

this Part begins to apply to the group of which S is a member from the beginning of the specified accounting period.

2

P may give a notice under section 109 (as modified by paragraph 8 of Schedule 17) in accordance with subsection (1)(c) even if it does not expect to satisfy Conditions 3 to 6 of section 106 throughout the accounting period specified in the notice.

3

Where this section applies—

a

sections 111 and 112 shall not apply to the group of which S is a member in relation to the asset disposed of by C (tax-exempt) or in relation to business conducted by the exploitation of that asset, and

b

section 125 shall not apply to the disposal of the asset by C (tax-exempt).

4

But if, at the end of the period of six months mentioned in subsection (1)(c), Conditions 3 to 6 of section 106 are not satisfied in relation to P, subsection (3) shall be treated as not having had effect.