CG46803 - Value shifting: outline for groups: scope of value shifting charge

The following instructions describe the value shifting rules which apply to companies following the changes introduced by FA89/S135 - FA89/S137. These rules apply to disposals on or after 14 March 1989. They deal separately with two different types of depreciatory transaction: intra-group dividends, and intra-group asset transfers. The provisions are complex. Anti-Avoidance Group (Investigation) would like to see any case where a company disposes of shares in a subsidiary, and which falls within either of the following categories

• intra-group dividends: before the disposal the subsidiary paid a dividend out of reserves which were created by the intra-group transfer of an asset at a commercial (book) gain, and the transferred asset left the group at the same time as the shares in the subsidiary, see CG46805 and CG46820,
• intra-group asset transfers: before the disposal there was an intra-group transfer of an asset at a commercial (book) loss, see CG46880.