(1)This section deals with the application of Chapter 7 (roll-over relief in case of realisation and reinvestment) in relation to a company that is a member of a group.
(2)Chapter 7 does not apply if the expenditure on other assets is expenditure on the acquisition of assets from another member of the same group by a tax-neutral transfer.
(3)Chapter 7 applies as if two companies (“A” and “B”) are the same person if—
(a)the realisation of the old asset is by A,
(b)at the time of the realisation A is a member of a group,
(c)the expenditure on other assets is by B,
(d)B is a member of the same group as A at the time the expenditure is incurred (“the expenditure time”),
(e)B is not a dual resident investing company within the meaning of section 404 of ICTA (limitation of group relief) at the expenditure time,
(f)immediately after the expenditure time the other assets are chargeable intangible assets in relation to B, and
(g)both A and B make a claim for relief under Chapter 7.
(4)Expressions used in this section that are defined for the purposes of Chapter 7 have the same meaning in this section.
(5)In particular, see section 754 for the meaning of “the old asset” and “the other assets”.
(1)Chapter 7 (roll-over relief in case of realisation and reinvestment) applies in accordance with section 779 if—
(a)a company (“A”) acquires a controlling interest in another company (“B”), and
(b)intangible fixed assets (“underlying assets”) are held by B or one or more other companies within subsection (2).
(2)A company is within this subsection if—
(a)it was not in the same group as A before the acquisition, and
(b)as a result of the acquisition it is in the same group as A immediately after it.
(3)For this purpose A acquires a controlling interest in B if—
(a)A and B are not in the same group,
(b)A acquires shares in B, and
(c)as a result of the acquisition A and B are in the same group immediately after the acquisition.
(4)A claim for relief under Chapter 7 made because of section 779 must be made jointly by A and the company or companies holding the underlying assets concerned.
(5)In this section and section 779 expressions that are defined for the purposes of Chapter 7 have the same meaning as in that Chapter.
(1)The expenditure by A on the acquisition is treated as expenditure on acquiring the underlying assets.
(2)The amount of the expenditure so treated is taken to be the lower of—
(a)the tax written-down value of the underlying assets immediately before the acquisition, and
(b)the amount or value of the consideration for the acquisition.
(3)The requirement in section 756(3) (that immediately after the expenditure on acquiring the assets is incurred the assets must be chargeable intangible assets in relation to A) is treated as met in relation to the underlying assets if the condition in subsection (4) is met.
(4)That condition is that the underlying assets are chargeable intangible assets in relation to the company by which they are held immediately after the acquisition by A.
(5)The tax written-down value of the underlying assets in the hands of the company by which they are held is reduced by the amount available for relief (but see subsections (6) and (7)).
(6)If—
(a)there is more than one underlying asset, and
(b)the amount of expenditure on other assets that is treated as incurred exceeds the amount available for relief,
the company which holds the underlying assets may decide how the amount available for relief is to be allocated in reducing the tax written-down values of the assets.
(7)If there are two or more such companies, they may agree between them how that amount is to be allocated.
(8)In this section references to “A” and “B” and “underlying assets” must be read in accordance with section 778(1).