GREIT05035 - Capital gains: company ceasing to be a member of a group (section 179 TCGA)

There are no special rules changing the way in which section 179 TCGA applies to a UK-REIT. The broad effect of these provisions is to bring back into charge a gain deferred on an earlier no gain/no loss disposal if the asset in question leaves the group otherwise than by a direct disposal of the asset (a de-grouping event). The rules achieve this by a deemed disposal at market value. The company leaving the group makes a deemed disposal and reacquisition of the asset at market value immediately after the time it acquired the asset from another group company. For detail on the operation of these provisions, see CGM45400+.

There are no extra de-grouping events associated with membership of a Group REIT since the deeming provision in section 136(1) FA 2006 (of G (tax-exempt) as a separate group) does not apply to section 179 TCGA.

Once a de-grouping charge is triggered, its operation can be affected by the fact that section 113(2) FA 2006 treats the part of a company carrying on a tax exempt business as a separate company for the purposes of CT. This may be relevant where, for example, a previously tax- exempt company leaves a Group REIT. This is covered in the examples at GREIT05050.

The examples at GREIT05037 illustrate how section 179 TCGA will operate in typical situations for a Group REIT.