Finance Act 2022

PART 4 Groups

Acquisition of assets into and out of QAHC ring fence business from other member of group

33 (1) This paragraph applies to a disposal by a company to a QAHC of any of the following at a time when the company and the QAHC are members of the same group, other than a disposal from any QAHC ring fence business of the company—

(a) any overseas land;

(b) any loan relationship or derivative contract the QAHC will, following its acquisition, be party to for the purposes of an overseas property business of the QAHC, to the extent (apportioned on a just and reasonable basis)—

(i) the relationship or contract is attributable to those purposes, and

(ii) profits arising from that relationship or contract will be exempt from corporation tax as a result of paragraph 52(4);

(c) any qualifying shares;

(d) any other asset that will, as a result of the disposal, be within the QAHC ring fence business of the QAHC.

(2) This paragraph also applies to the disposal by a QAHC of any assets within its QAHC ring fence business to a company at a time when the QAHC and the company are members of the same group, unless the assets will, as a result of the transfer, be within a QAHC ring fence business of the company.

(3) The following do not apply to a disposal to which this paragraph applies—

(a) section 171 of TCGA 1992 (transfers within a group: general provisions);

(b) section 336 of CTA 2009 (transfers of loans on group transactions);

(c) section 625 of CTA 2009 (group member replacing another as party to derivative contract).

Continuity of substantial shareholdings between group members

34 (1) Where—

(a) A QAHC (“Q”) holds a substantial shareholding in a company as a result of a disposal of qualifying shares to it from a company (“G”) made at a time when Q and G are members of the same group,

(b) immediately before the disposal, G held a substantial shareholding in that company as a result of holding the shares that were disposed of,

(c) at that time, those shares had been held by G for less than 12 months,

(d) following the disposal Q holds those shares until they have been held by G and Q between them for a total period of 12 months (whether or not Q remains a QAHC at the end of that period), and

(e) if the shares had instead been held by Q throughout that entire period and Q were to dispose of them immediately after the end of that period, any gain on that disposal would not be a chargeable gain as a result of an exemption under Part 1 of Schedule 7AC to TCGA 1992 (exemptions for disposals by companies with substantial shareholding),

any gain accruing to G on the disposal to Q is not a chargeable gain.

(2) But in determining, for the purposes of sub-paragraph (1)(e), whether a gain on a disposal would not be a chargeable gain as a result of an exemption under Part 1 of Schedule 7AC to TCGA 1992, that Schedule has effect as if—

(a) paragraph 9 of that Schedule (aggregation of holdings of group companies) were omitted,

(b) paragraph 11 of that Schedule were omitted, and

(c) in paragraph 19(1), the references to the time of the disposal were instead to the end of the 12 month period referred to in sub-paragraph (1)(d).

(3) Where—

(a) a company that has ceased to be a QAHC (“C”) acquired (when it was a QAHC) shares from a company (“G”) as a result of a transfer described in paragraph 33(1) (disposal to QAHC by member of same group),

(b) immediately before the disposal, G held a substantial shareholding in a company as a result of holding the shares that were disposed of,

(c) at that time, those shares had been held by G for less than 12 months, and

(d) following the disposal C holds those shares until they have been held by G and the C between them for a total period of 12 months,

C is, for the purposes of paragraph 7 of Schedule 7AC to TCGA 1992, to be deemed to have held the shares for that entire period.

Meaning of “group” in paragraphs 33 and 34

35 In paragraphs 33 and 34, references to a company being a member of a group of companies are to be read in accordance with section 170 of TCGA 1992 (interpretation of sections 171 to 181 of that Act: groups).

Gain or loss arising where section 179 of TCGA 1992 applies in relation to transfer of assets

36 (1) This paragraph applies where—

(a) section 179 of TCGA 1992 (company ceasing to be a member of group) applies in relation to the acquisition of an asset (“the relevant asset”), other than an exempt asset, by a company (“A”) from another company (“B”),

(b) a chargeable gain or an allowable loss would have accrued to B on a disposal of qualifying shares, but did not as B was a QAHC at the time of the disposal of those shares (see paragraph 53), and

(c) that gain or loss would have been adjusted as a result of subsection (3D) or (3E) of that section by reference to a chargeable gain or an allowable loss that would, in the absence of subsection (3A), have accrued to A under subsection (3) in relation to the relevant asset.

(2) Where a chargeable gain would have accrued to A, a chargeable gain in the same amount is treated as accruing to B outside its QAHC ring fence business.

(3) Where an allowable loss would have accrued to A, an allowable loss in the same amount is treated as accruing to B outside its QAHC ring fence business.

(4) Assets are exempt assets if a gain accruing to a QAHC on a disposal of such assets would not be a chargeable gain as a result of paragraph 53 (no chargeable gain on disposal of overseas land or qualifying shares).