Income and Corporation Taxes Act 1970 (repealed 6.4.1992)

279 Shares in subsidiary member of a group. U.K.

(1) This section has effect if a company (in this section called “the subsidiary") ceases to be a member of a group of companies, and on an earlier occasion shares in the subsidiary were disposed of by another company (in this section called “the chargeable company") which was then a member of that group in the course of an amalgamation or reconstruction in the group, but only if that earlier occasion fell—

(a) on or after 6th April 1965 [F1 but before 20th April 1977], and

(b) within the period of six years ending with the date on which the subsidiary ceases to be a member of the group;

and references in this section to a company ceasing to be a member of a group of companies do not apply to cases where a company ceases to be a member of a group by being wound up or dissolved or in consequence of another member of the group being wound up or dissolved.

(2) The chargeable company shall be treated, for all the purposes of [F2 the Capital Gains Tax Act 1979], as if immediately before the earlier occasion it had sold, and immediately reacquired, the said shares at market value at that time.

(3) If, before the subsidiary ceases to be a member of the group, the chargeable company has ceased to exist, or a resolution has been passed, or an order made, for the winding up of the company, or any other act has been done for the like purpose, any corporation tax to which, if the chargeable company had continued in existence, it would have been chargeable in consequence of this section may be assessed and charged (in the name of the chargeable company) on the company which is, at the time when the subsidiary ceases to be a member of the group, the principal company of the group.

(4) If any of the corporation tax assessed on a company in consequence of this section, or in pursuance of subsection (3) above, is not paid within six months from the date when it becomes payable, then—

(a) a company which is on the said date, or was on the earlier occasion, the principal company of the group, and

(b) any company taking an interest in the subsidiary as part of the amalgamation or reconstruction in the group,

may at any time within two years from the time when the tax became payable, be assessed and charged (in the name of the chargeable company) to all or any part of that tax; and a company paying any amount of tax under this subsection shall be entitled to recover a sum of that amount from the chargeable company, or as the case may be from the company assessed under subsection (3) above.

(5) Notwithstanding any limitation on the time for making assessments, an assessment to corporation tax chargeable in consequence of this section may be made at any time within six years from the time when the subsidiary ceased to be a member of the group and, in relation to any disposal of the property after the earlier occasion, there shall be made all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section.

(6) For the purposes of this section there is a disposal of shares in the course of an amalgamation or reconstruction in a group of companies if [F3 section 85 or section 86 of the Capital Gains Tax Act 1979] (company amalgamations) applies to shares in a company so as to equate them with shares in or debentures of another company, and the companies are members of the same group, or become members of the same group as a result of the amalgamation or reconstruction.

(7) Where by virtue of [F3 section 86 of the Capital Gains Tax Act 1979] shares are to be treated as cancelled and replaced by a new issue, references in this section to a disposal of shares include references to the occasion of their being so treated.

(8) This section has effect, to the exclusion of the corresponding enactments repealed by this Act, where the subsidiary ceases to be a member of the group in an accounting period of the chargeable company (or, as the case may be, of the company assessable under subsection (3) above) ending after 5th April 1970, and not only in respect of tax for such an accounting period but also in respect of tax for accounting periods ending on or before that date.

Textual Amendments

F1 Words inserted by Capital Gains Tax Act 1979 (c. 14, SIF 63:2), s. 157(2), Sch. 7 para. 2 for 1979 to 80 et seq.

F2 Words inserted by Capital Gains Tax Act 1979 (c. 14, SIF 63:2), s. 157(2), Sch. 7 para. 8 for 1979-80 et seq.

F3 Words substituted by Capital Gains Tax Act 1979 (c. 14, SIF 63:2), s. 157(2), Sch. 7 para. 9 for 1979 to 80 et seq.

Modifications etc. (not altering text)

C1 See Finance Act 1973 (c. 51), s. 38(5) application of ss. 278 to 279 in relation to certain disposals by non-resident companies of offshore exploration or exploitation right; Capital Gains Tax Act 1979 (c. 14, SIF 63:2), s. 16 ss. 278 and 279 to apply to non-resident group of companies and Finance Act 1980 (c. 48), s. 117, Sch. 18 paras. 10, 15 application of ss. 278 and 279 to exempt distributions and chargeable payments.

C2 See Finance Act 1974 (c. 30), s. 47, Sch. 10 para. 1, s. 279(4)(5) applied in relation to development gains and tax in respect thereof.