CG52801 - Company reconstructions: company: general

Because the transfer is not treated as a disposal giving rise to a chargeable gain or allowable loss it is important the assets remain within the charge to UK tax in the hands of the recipient company. Therefore, there are a number of restrictions on the operation of TCGA92/S139.

Before 1 April 2000, the main mechanism for ensuring that assets remained within the charge to UK tax was a condition that both parties to a transfer under TCGA92/S139 had to be resident in the UK. This rule was changed by FA2000/SCH29/PARA5 with effect from 1 April 2000. For disposals on or after that date, TCGA92/S139 can apply (subject to satisfaction of the other conditions, see CG52803), provided, in relation to each company that is a party to the transfer, that:

• the company is resident in the UK or,

for transaction before 31 December 2002 –

• if it is non-resident, that any gains on disposals of the assets transferred would within the charge to corporation tax by virtue of TCGA92/S10 (3), because they are used or held for the purposes of a trade carried on in the UK by a branch or agency of the non-resident company.

for transactions after 31 December 2002 –

• if it is non-resident, that any gains on disposals of the assets transferred would come within the charge to corporation tax by virtue of TCGA92/S10B, because they are used or held for the purposes of a trade carried on in the UK through a permanent establishment of the non-resident company.

The transfer of all or part of a business to another company may involve the transfer of some assets that are not chargeable assets, such as motor cars. This will not prevent TCGA92/S139 from applying to the chargeable assets transferred, provided the conditions for relief are satisfied in relation to the chargeable assets.