In broad terms there is a demerger where trading activities carried on by a single company or group of companies are divided so as to be carried on by two or more independent companies or groups. There are special tax rules for demergers that fall within the scope of ICTA88/S213 (see CTM17200 onwards).
Paragraph 61 disapplies the degrouping adjustment in FA02/SCH29/PARA58 and PARA60, where a company ceases to be a member of a group by reason only of an exempt distribution within ICTA88/S213 (2).
If within five years of making the exempt distribution there is
a ‘chargeable payment’ then paragraphs 58 and 60 do
have effect. Because of the uncertainty as to whether returns will
have become final, enquiries can still be opened etc. Paragraph 61
(2) permits all such necessary adjustments by way of assessment,
amendment of returns, or otherwise to be made to reinstate the
effects of paragraphs 58 or 60.
For the meaning of ‘chargeable payment’ in this
context see CTM17290.
