4ZAGroup relief not withdrawn where vendor leaves group

1

Group relief is not withdrawn under paragraph 3 where the purchaser ceases to be a member of the same group as the vendor because the vendor leaves the group.

2

The vendor is regarded as leaving the group if the companies cease to be members of the same group by reason of a transaction relating to shares in—

a

the vendor, or

b

another company that—

i

is above the vendor in the group structure, and

ii

as a result of the transaction ceases to be a member of the same group as the purchaser.

3

For the purpose of sub-paragraph (2) a company is “above” the vendor in the group structure if the vendor, or another company that is above the vendor in the group structure, is a 75% subsidiary of the company.

4

But if there is a change in the control of the purchaser after the vendor leaves the group, paragraphs 3, 4(6) and (7), 5 and 6 have effect as if the purchaser had then ceased to be a member of the same group as the vendor (but see sub-paragraph (7)).

5

For the purposes of this paragraph there is a change in the control of the purchaser if—

a

a person who controls the purchaser (alone or with others) ceases to do so,

b

a person obtains control of the purchaser (alone or with others), or

c

the purchaser is wound up.

6

For the purposes of sub-paragraph (5) a person does not control, or obtain control of, the purchaser if that person is under the control of another person or other persons.

7

Sub-paragraph (4) does not apply where—

a

there is a change in the control of the purchaser because a loan creditor (within the meaning of section 417(7) to (9) of the Taxes Act 1988) obtains control of, or ceases to control, the purchaser, and

b

the other persons who controlled the purchaser before that change continue to do so.

8

In this paragraph references to “control” shall be interpreted in accordance with section 416 of the Taxes Act 1988 (subject to sub-paragraph (6)).