“profits” means income and chargeable gains, and

“trade” includes “vocation”, and includes also an office or employment.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

subsections (3) to (6) below apply to determine whether companies form a group and, where they do, which is the principal company of the group;

in applying the definition of “75 per cent. subsidiary” in section 838 of the Taxes Act any share capital of a registered industrial and provident society shall be treated as ordinary share capital; and

“group” and “subsidiary” shall be construed with any necessary modifications where applied to a company incorporated under the law of a country outside the United Kingdom.

a company (referred to below and in sections 171 to 181 as the “principal company of the group”) and all its 75 per cent. subsidiaries form a group and, if any of those subsidiaries have 75 per cent. subsidiaries, the group includes them and their 75 per cent. subsidiaries, and so on, but

a group does not include any company (other than the principal company of the group) that is not an effective 51 per cent. subsidiary of the principal company of the group.

it is a member of the group it would be a member of if, in applying subsection (3)(b) above, there were left out of account any amount to which a head of a group is or would be beneficially entitled of any profits available for distribution to equity holders of a head of another group or of any assets of a head of another group available for distribution to its equity holders on a winding-up,

it is a member of the group the head of which is beneficially entitled to a percentage of profits available for distribution to equity holders of the company that is greater than the percentage of those profits to which any other head of a group is so entitled,

it is a member of the group the head of which would be beneficially entitled to a percentage of any assets of the company available for distribution to its equity holders on a winding-up that is greater than the percentage of those assets to which any other head of a group would be so entitled,

it is a member of the group the head of which owns directly or indirectly a percentage of the company’s ordinary share capital that is greater than the percentage of that capital owned directly or indirectly by any other head of a group (interpreting this paragraph as if it were included in section 838(1)(a) of the Taxes Act).

the parent is beneficially entitled to more than 50 per cent. of any profits available for distribution to equity holders of the subsidiary; and

the parent would be beneficially entitled to more than 50 per cent. of any assets of the subsidiary available for distribution to its equity holders on a winding-up.

a company within the meaning of the M1Companies Act 1985 or the corresponding enactment in Northern Ireland, and

a company F142(other than a limited liability partnership) which is constituted under any other Act or a Royal Charter or letters patent or F82... is formed under the law of a country or territory outside the United Kingdom, and

a registered industrial and provident society within the meaning of section 486 of the Taxes Act; and

an incorporated friendly society within the meaning of the Friendly Societies Act 1992; and

a building society.

a company (“company A”) disposes of an asset to another company (“company B”) at a time when both companies are members of the same group, and

the conditions in subsection (1A) below are met,

that company A is resident in the United Kingdom at the time of the disposal, or the asset is a chargeable asset in relation to that company immediately before that time, and

that company B is resident in the United Kingdom at the time of the disposal, or the asset is a chargeable asset in relation to that company immediately after that time.

For this purpose an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section F16110B form part of its chargeable profits for corporation tax purposes.

a disposal of a debt due from F85company B effected by satisfying the debt or part of it; or

a disposal of redeemable shares in a company on the occasion of their redemption; or

a disposal by or to an investment trust; or

a disposal by or to a venture capital trust; or

a disposal by or to a qualifying friendly society; or

a disposal to a dual resident investing company; F26...

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

two companies (“A” and “B”) are members of a group of companies; and

A disposes of an asset to a person who is not a member of the group (“C”).

the asset, or any part of it, shall be deemed to have been transferred by A to B immediately before the disposal to C;

section 171(1) shall be deemed to have applied to that transfer; F143...

the disposal of the asset or part to C shall be deemed to have been made by BF144; and

any incidental costs to A of making the actual disposal to C shall be deemed to be incidental costs to B of making the deemed disposal to C.

shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and

shall not for any purposes of the Corporation Tax Acts be regarded as a distribution or a charge on income,

a company (“company A”) acquires an asset as trading stock of a trade to which this section applies,

the acquisition is from a company (“company B”) that at the time of the acquisition is a member of the same group of companies, and

the asset did not form part of the trading stock of any such trade carried on by company B,

a company (“company C”) disposes of an asset forming part of the trading stock of a trade to which this section applies carried on by that company,

the disposal is to another company (“company D”) that at the time of the disposal is a member of the same group of companies, and

the asset is acquired by company D otherwise than as trading stock of any such trade carried on by it,

any trade carried on by a company resident in the United Kingdom, and

any trade carried on in the United Kingdom through a F164permanent establishment by a company not so resident.

any trade carried on by a company that is resident in the United Kingdom, and

any trade carried on in the United Kingdom through a F165permanent establishment by a company not so resident.

the disposal is by a company which, at the time of the disposal, is a member of a group of companies,

the acquisition is by another company which, at the time of the acquisition, is a member of the same group, and

the conditions in subsection (2AA) below are met, and

the claim is made by both companies,

that the company making the disposal is resident in the United Kingdom at the time of the disposal, or the assets are chargeable assets in relation to that company immediately before that time, and

that the acquiring company is resident in the United Kingdom at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately after that time.

disposes of assets (or an interest in assets) used, and used only, for the purposes of the trade which (in accordance with subsection (1) above) is treated as carried on by the members of the group which carry on a trade, or

acquires assets (or an interest in assets) taken into use, and used only, for those purposes,

is made by a company which is a member of a group of companies, and

is one to which any of the enactments specified in section 35(3)(d) applies.

as if all members of the group for the time being carrying on a trade to which this section applies were the same person, and

in accordance with subsection (1) above, as if all those trades were the same trade;

any disposal of assets at other than market value by one member of a group of companies to another, or

any other transaction satisfying the conditions of subsection (2) below,

that the company, the shares in which, or securities of which, are the subject of the ultimate disposal, or any 75 per cent. subsidiary of that company, was a party to the transaction, and

that the parties to the transaction were or included 2 or more companies which at the time of the transaction were members of the same group of companies.

“securities” includes any loan stock or similar security whether secured or unsecured,

references to the disposal of assets include references to any method by which one company which is a member of a group appropriates the goodwill of another member of the group, F99...

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

that the holding amounts to, or is an ingredient in a holding amounting to, 10 per cent. of all holdings of the same class in the second company,

that the first company is not a dealing company in relation to the holding,

that a distribution is or has been made to the first company in respect of the holding, and

that the effect of the distribution is that the value of the holding is or has been materially reduced.

a company’s holdings of different classes in another company shall be treated as separate holdings, and

holdings of securities which differ in the entitlements or obligations they confer or impose shall be regarded as holdings of different classes.

all a company’s holdings of the same class in another company are to be treated as ingredients constituting a single holding, and

a company’s holding of a particular class shall be treated as an ingredient in a holding amounting to 10 per cent. of all holdings of that class if the aggregate of that holding and other holdings of that class held by connected persons amounts to 10 per cent. of all holdings of that class,

a company (“company A”) acquires an asset from another company (“company B”) at a time when company B is a member of a group,

the conditions in subsection (1A) below are met, and

company A ceases to be a member of that group within the period of six years after the time of the acquisition.

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 in consequence of another member of the group ceasing to exist.

that company A is resident in the United Kingdom at the time it acquires the asset, or the asset is a chargeable asset in relation to that company immediately after that time, and

that company B is resident in the United Kingdom at the time of that acquisition, or the asset is a chargeable asset in relation to that company immediately before that time.

For this purpose an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section F16710B form part of its chargeable profits for corporation tax purposes.

a company F103(“company A”) that has ceased to be a member of a group of companies (“the first group”) acquired an asset from another company F104(“company B”) which was a member of that group at the time of the acquisition,

subsection (2) above applies in the case of F105company A’s ceasing to be a member of the first group so that subsection (1) above does not have effect as respects the acquisition of that asset,

F106company A subsequently ceases to be a member of another group of companies (“the second group”), and

there is a connection between the two groups,

the company which is the principal company of the first group or, if that group no longer exists, which was the principal company of that group when F108company A ceased to be a member of it;

any F66person or persons who control the company mentioned in paragraph (a) above or who have had it under their control at any time in the period since F108company A ceased to be a member of the first group; or

the asset, or

property to which a chargeable gain has been carried forward from the asset on a replacement of business assets,

the time immediately after the beginning of the accounting period of that company in which or, as the case may be, at the end of which the company ceases to be a member of the group; and

the time when under subsection (3) above it is treated as having reacquired the asset;

within 6 years of that time the company in question ceases at any time (“the relevant time”) to satisfy the following conditions, and

at the relevant time, the company in question, or a company in the same group as that company, owns otherwise than as trading stock the asset or property to which a chargeable gain has been carried forward from the asset on a replacement of business assets,

that the company is a 75 per cent. subsidiary of one or more members of the other group referred to in subsection (5) above, and

that the company is an effective 51 per cent. subsidiary of one or more of those members.

by virtue of this section a company is treated as having sold an asset at any time, and

if at that time the company had in fact sold the asset at market value at that time, then, by virtue of section 30, any allowable loss or chargeable gain accruing on the disposal would have been calculated as if the consideration for the disposal were increased by an amount,

2 or more companies are associated companies if, by themselves, they would form a group of companies,

a chargeable gain is carried forward from an asset to other property on a replacement of business assets if, by one or more claims under sections 152 to 158, the chargeable gain accruing on a disposal of the asset is reduced, and as a result an amount falls to be deducted from the expenditure allowable in computing a gain accruing on the disposal of the other property,

an asset acquired by F110company A shall be treated as the same as an asset owned at a later time by that company or an associated company if the value of the second asset is derived in whole or in part from the first asset, and in particular where the second asset is a freehold, and the first asset was a leasehold and the lessee has acquired the reversion.

a company (“company A”) is treated by virtue of section 179(3) or (6) as having sold and immediately reacquired an asset at market value, and

a chargeable gain or an allowable loss accrues to the company on the deemed sale.

in a case where section 179(3) applies, the time at which, by virtue of section 179(4), the gain or loss referred to in subsection (1) above is treated as accruing to company A;

in a case where section 179(6) applies, the latest time at which the company satisfies the conditions in section 179(7).

a joint election under this section is made by company A and a company (“company C”) that was a member of the relevant group at the time of accrual, and

the conditions in subsections (6) to (8) below are all met,

in a case where section 179(3) applies, the group of which company A was a member at the time of accrual;

in a case where section 179(6) applies, the second group referred to in section 179(5).

was resident in the United Kingdom, or

owned assets that were chargeable assets in relation to it.

by notice to an officer of the Board;

no later than two years after the end of the accounting period of company A in which the time of accrual fell.

shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and

shall not for any purposes of the Corporation Tax Acts be regarded as a distribution or a charge on income,

references to company A, except those in sections 152(1)(a) and (1B), 153(1B), 153A(5), 159(1), 175 and 198(1), were to company C;

the references to “that company” in section 159(1) and “the company” in section 185(3)(b) were to company C;

the reference to “that trade” in section 198(1) were to a ring fence trade carried on by company C.

as part of a merger, a company (“company A”) ceases to be a member of a group of companies (“the A group”); and

F52... the merger was carried out for bona fide commercial reasons and F52... the avoidance of liability to tax was not the main or one of the main purposes of the merger.

whereby one or more companies (“the acquiring company” or, as the case may be, “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; and

whereby 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 acquiring companies or by a company at least 90 per cent. of the ordinary share capital of which was then beneficially owned by 2 or more of the acquiring companies; and

in respect of which the conditions in subsection (4) below are fulfilled.

that not less than 25 per cent. by value of each of the interests acquired as mentioned in paragraphs (a) and (b) of subsection (2) above consists of a holding of ordinary share capital, and the remainder of the interest, or as the case may be of each of the interests, acquired as mentioned in subsection (2)(b), consists of a holding of share capital (of any description) or debentures or both; and

that the value or, as the case may be, the aggregate value of the interest or interests acquired as mentioned in subsection (2)(a) above is substantially the same as the value or, as the case may be, the aggregate value of the interest or interests acquired as mentioned in subsection (2)(b) above; and

that the consideration for the acquisition of the interest or interests acquired by the acquiring company or acquiring companies as mentioned in subsection (2)(a) above, disregarding any part of that consideration which is small by comparison with the total, either consists of, or is applied in the acquisition of, or consists partly of and as to the balance is applied in the acquisition of, the interest or interests acquired by members of the A group as mentioned in subsection (2)(b) above;

to have disposed of all its assets, other than assets excepted from this subsection by subsection (4) below, immediately before the relevant time; and

immediately to have reacquired them,

has disposed of the old assets, or of its interest in those assets, before the relevant time; and

acquires the new assets, or its interest in those assets, after that time,

any assets which, immediately after the relevant time, are situated in the United Kingdom and are used in or for the purposes of the trade, or are used or held for the purposes of the F168permanent establishment, shall be excepted from subsection (2) above; and

any new assets which, after that time, are so situated and are so used or so held shall be excepted from subsection (3) above;

“designated area”, “exploration or exploitation activities” and “exploration or exploitation rights” have the same meanings as in section 276;

“exploration or exploitation assets” means assets used or intended for use in connection with exploration or exploitation activities carried on in the United Kingdom or a designated area;

“the old assets” and “the new assets” have the same meanings as in section 152;

immediately after the relevant time, a company to which this section applies by virtue of section 185 F29... (“the company”) is a 75 per cent. subsidiary of another company (“the principal company”) which is resident in the United Kingdom; and

the principal company and the company so elect, by notice given to the inspector within 2 years after that time,

that disposal shall be treated as giving rise to a single chargeable gain equal to the aggregate of those gains after deducting the aggregate of those losses; and

the whole of that gain shall be treated as not accruing to the company on that disposal but an equivalent amount (“the postponed gain”) shall be brought into account in accordance with subsections (3) and (4) below.

the company ceases to be a 75 per cent. subsidiary of the principal company on the disposal by the principal company of ordinary shares of the company;

after the company has ceased to be such a subsidiary otherwise than on such a disposal, the principal company disposes of such shares; or

the principal company ceases to be resident in the United Kingdom,

the company has allowable losses which have not been allowed as a deduction from chargeable gains; and

a chargeable gain accrues to the principal company under subsection (3) or (4) above,

the capital so distributed derives from the disposal of assets in respect of which a chargeable gain accrued to the company; or

the distribution constitutes such a disposal of assets;

not exceeding the amount or value of the capital distribution which the shareholder has received or become entitled to receive; and

not exceeding a proportion equal to the shareholder’s share of the capital distribution made by the company of corporation tax on the amount of that gain at the rate in force when the gain accrued.

the date when the tax becomes due and payable by the company; and

the date when the assessment was made on the company.

with the substitution for the words in subsection (3) after “above" of the words “ is the date when the tax becomes payable by the company ”; and

with the omission of the words in subsection (4) from “together" to the end of the subsection.

a chargeable gain has accrued to a company (“the taxpayer company”),

the condition in subsection (2) below is met, and

the whole or part of the corporation tax assessed on the company for the accounting period in which the gain accrued (“the relevant accounting period”) is unpaid at the end of the period of six months after it became payable.

that the taxpayer company is resident in the United Kingdom at the time when the gain accrued, or

that the gain forms part of the taxpayer company’s chargeable profits for corporation tax purposes by virtue of section F16910B.

if the gain forms part of the chargeable profits of the taxpayer company for corporation tax purposes by virtue of section F17010B, any person who is, or during the period of twelve months ending with the time when the gain accrued was, a controlling director of the taxpayer company or of a company which has, or within that period had, control over the taxpayer company.

the amount which remains unpaid of the corporation tax assessed on the taxpayer company for the relevant accounting period, or

if less, an amount equal to corporation tax on the amount of the chargeable gain at the rate in force when the gain accrued.

the amount of corporation tax assessed on the taxpayer company for the relevant accounting period that remains unpaid,

the date when it first became payable, and

the amount required to be paid by the person on whom the notice is served.

for the purposes of the recovery from that person of the amount required to be paid and of interest on that amount, and

for the purposes of appeals,

the last date on which notice of enquiry may be given into the return containing the self-assessment;

if notice of enquiry is given, 30 days after the enquiry is completed;

if more than one notice of enquiry is given, 30 days after the last notice of completion;

if after such an enquiry the Inland Revenue amend the return, 30 days after notice of the amendment is issued;

if an appeal is brought against such an amendment, 30 days after the appeal is finally determined.

where there is no appeal against the assessment, the date when the tax becomes due and payable;

where there is such an appeal, the date on which the appeal is finally determined.

the distribution shall not be a capital distribution for the purposes of section 122; and

sections 126 to 130 shall, with the necessary modifications, apply as if that company and the subsidiary whose shares are transferred were the same company and the distribution were a reorganisation of its share capital.

any share capital which it owns directly in a body corporate if a profit on a sale of the shares would be treated as a trading receipt of its trade; or

any share capital which it owns indirectly and which is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt.

another licence which at that time relates to an undeveloped area or an interest in another such licence, or

an obligation to undertake exploration work or appraisal work in an area which is or forms part of the licensed area in relation to the licence disposed of,

which is a part disposal of the licence in question, and

part but not the whole of the consideration for which falls within paragraph (a) or paragraph (b) of subsection (2) above,

in searching for oil anywhere in the licensed area, or

in ascertaining the extent or characteristics of any oil-bearing area the whole or part of which lies in the licensed area or what the reserves of oil of any such oil-bearing area are,

it is expenditure of a capital nature on F118research and development; and

either it is expenditure in respect of which the person was entitled to an allowance under section 441 of the Capital Allowances Act (research and development allowances) for a relevant chargeable period which began before the date of the disposal or it would have been such expenditure if the trading condition had been fulfilled, and

on the disposal, section 443 of that Act (disposal values) applies in relation to the expenditure or would apply if the trading condition had been fulfilled (and the expenditure had accordingly been qualifying expenditure under Part 6 of that Act).

is required to be brought into account under section 443 of the Capital Allowances Act; or

would be required to be so brought into account if the trading condition had been fulfilled (and the expenditure had accordingly been qualifying expenditure under Part 6 of that Act).

no allowance shall be made in respect of that expenditure under F139section 441 of the Capital Allowances Act; F140...

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

for no part of the licensed area has consent for development been granted to the licensee by the Secretary of State on or before that time; and

for no part of the licensed area has a programme of development been served on the licensee or approved by the Secretary of State on or before that time.

no development has actually taken place in any part of the licensed area; and

“exploration work”, in relation to any area, means work carried out for the purpose of searching for oil anywhere in that area;

“appraisal work”, in relation to any area, means work carried out for the purpose of ascertaining the extent or characteristics of any oil-bearing area the whole or part of which lies in the area concerned or what the reserves of oil of any such oil-bearing area are.

a disposal of an interest in oil to be won from the oil field; or

a disposal of an asset used in connection with the field;

a disposal falling within paragraph (a) or paragraph (b) of subsection (1) above; or

the sale of an asset referred to in section F121... 179(3) where the asset was acquired by the chargeable company (within the meaning of that section) on a disposal falling within one of those paragraphs.

the chargeable gains accruing to him in that period on such disposals, and

the allowable losses accruing to him in that period on such disposals,

the several chargeable gains and allowable losses falling within paragraphs (a) and (b) of subsection (3) above shall be left out of account; and

the aggregate gain or aggregate loss referred to in that subsection shall be treated as a single chargeable gain or allowable loss accruing to the chargeable person in the chargeable period concerned on the notional disposal of an asset; and

if in any chargeable period there is an aggregate loss, then, except as provided by subsection (5) below, it shall not be allowable as a deduction against any chargeable gain arising in that or any later period, other than an aggregate gain treated as accruing in a later period by virtue of paragraph (b) above (so that the aggregate gain of that later period shall be reduced or extinguished accordingly); and

if in any chargeable period there is an aggregate gain, no loss shall be deducted from it except in accordance with paragraph (c) above; and

without prejudice to any indexation allowance which was taken into account in determining an aggregate gain or aggregate loss under subsection (3) above, no further indexation allowance shall be allowed on a notional disposal referred to in paragraph (b) above.

by virtue of subsection (4)(b) above, an aggregate loss is treated as accruing to the chargeable person in any chargeable period, and

before the expiry of the period of 2 years beginning at the end of the chargeable period concerned, the chargeable person makes a claim under this subsection,

the loss shall be excluded from those referred to in paragraph (b) of subsection (3) above and, accordingly, shall not be aggregated under that subsection; and

except as provided by subsection (7) below, section 18 shall apply in relation to the loss as if, in subsection (3) of that section, any reference to a disposal were a reference to a disposal which is a material disposal; and

to the extent that the loss is set against a chargeable gain by virtue of paragraph (b) above, the gain shall be excluded from those referred to in paragraph (a) of subsection (3) above and, accordingly, shall not be aggregated under that subsection.

the losses accruing to the chargeable person in any chargeable period on material disposals to a connected person exceed the gains accruing to him in that chargeable period on material disposals made to that person at a time when they are connected persons, and

before the expiry of the period of 2 years beginning at the end of the chargeable period concerned, the chargeable person makes a claim under this subsection,

the reference in subsection (2)(b) of that section to a trade carried on by the claimant shall be construed as a reference solely to his ring fence trade; and

subsections (4) to (7) of that section shall be omitted.

only those members of a group which actually carry on a ring fence trade shall be treated for the purposes of those sections as carrying on a single trade which is a ring fence trade; and

only those activities which, in relation to each individual member of the group, constitute its ring fence trade shall be treated as forming part of that single trade.

“material disposal” has the meaning assigned to it by section 197; and

“ring fence trade” means a trade consisting of either or both of the activities mentioned in paragraphs (a) and (b) of subsection (1) of section 492 of the Taxes Act.

to have disposed of the asset immediately before the time when it ceased to be so dedicated, and

immediately to have reacquired it,

to have disposed immediately before the time when he ceased to carry on the trade in the United Kingdom through a branch or agency of every asset to which subsection (3) below applies, and

immediately to have reacquired every such asset,

to have disposed of the asset immediately before the time when he ceased to use it in or for the purposes of such activities, and

immediately to have reacquired it,

would be gains in respect of which he would be chargeable to capital gains tax under section 10(1), or

would form part of his chargeable profits for corporation tax purposes by virtue of section F17110B.

“exploration or exploitation asset” means an asset used in connection with exploration or exploitation activities carried on in the United Kingdom or a designated area;

“designated area” and “exploration or exploitation activities” have the same meanings as in section 276; and

the expressions “dedicated to an oil field” and “participator” shall be construed as if this section were included in Part I of the M13Oil Taxation Act 1975.

on the expiry or termination of the mineral lease or agreement;

if the relevant interest is disposed of, or is treated as having been disposed of by virtue of any provision of this Act.

if the expiry or termination of the mineral lease or agreement is also a relevant event falling within subsection (2)(b) above; nor

unless, on the notional disposal referred to above, an allowable loss would accrue to the taxpayer.