CIRD40580 - Intangible assets: groups:
degrouping: exclusion of commercial mergers
FA02/SCH29/PARA62
Outline
There are no degrouping adjustments applicable where the
transferee ceases to be part of a group as a result of a merger,
and the merger is carried out for bona fide commercial reasons and
where the avoidance of liability to tax is not the main, or one of
the main, purposes of the merger.
Mergers - definition
A merger is an arrangement or series of arrangements that
satisfies all the following conditions:
- One or more companies (`the acquiring
company' or `the acquiring companies'), none of which is a member
of the A group acquires or acquire, otherwise than with a view to
their disposal, one or more interests in the whole or part of the
business which, before the arrangement took effect, was carried on
by company A.
- One or more members of the A group
acquires or acquire, otherwise than with a view to their disposal,
one or more interests in the whole or part of the business or each
of the businesses which, before the arrangement took effect, was
carried on either by the acquiring company or companies (as used in
the bullet point above) or by a company at least 90% of the
ordinary share capital of which was beneficially owned by two or
more acquiring companies.
- At least 25% by value of each of the
interests acquired:
- by the acquiring company or companies in
the company A business,
- by the A group in businesses carried on by
the acquiring company or companies (or their 90%
subsidiaries),
consists of a holding of ordinary share capital.
- The remainder of each interest acquired by
the A group in businesses carried on by the acquiring company or
companies (or their 90% subsidiaries) consists of a holding of
share capital (of any description) or debentures, or both.
- The value of the interests acquired by the
acquiring company or companies in the company A business is
substantially the same as the value of the interests acquired by
the A group in businesses carried on by the acquiring company or
companies (or their 90% subsidiaries).
- The consideration for the acquisition of
the interests acquired by the acquiring company or companies in the
company A business (disregarding any part of the consideration
which is small compared with the total) either consists of, or is
applied in the acquisition of, the interests acquired by the A
group in businesses carried on by the acquiring company or
companies (or their 90% subsidiaries).
For the purposes of the first two conditions, a member of a
group of companies is treated as carrying on as one business the
activities of the entire group. The value of an interest is
determined as at the date of its acquisition.
