Part VICompanies, oil, insurance etc.

Chapter ICompanies

Transactions within groups

172Transfer of United Kingdom branch or agency

1

Subject to subsections (3) and (4) below, subsection (2) below applies for the purposes of corporation tax on chargeable gains where—

a

there is a scheme for the transfer by a company (“company A”)—

i

which is not resident in the United Kingdom, but

ii

which carries on a trade in the United Kingdom through a branch or agency,

of the whole or part of the trade to a company resident in the United Kingdom (“company B”),

b

company A disposes of an asset to company B in accordance with the scheme at a time when the 2 companies are members of the same group, and

c

a claim in relation to the asset is made by the 2 companies within 2 years after the end of the accounting period of company B during which the disposal is made.

2

Where this subsection applies—

a

company A and company B shall be treated as if the asset were acquired by company B for a consideration of such amount as would secure that neither a gain nor a loss would accrue to company A on the disposal, and

b

section 25(3) shall not apply to the asset by reason of the transfer.

3

Subsection (2) above does not apply where—

a

company B, though resident in the United Kingdom,—

i

is regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom, and

ii

by virtue of the arrangements would not be liable in the United Kingdom to tax on a gain arising on a disposal of the asset occurring immediately after its acquisition, or

b

company B is either a dual resident investing company or an investment trust.

4

Subsection (2) above shall not apply unless any gain accruing to company A—

a

on the disposal of the asset in accordance with the scheme, or

b

where that disposal occurs after the transfer has taken place, on a disposal of the asset immediately before the transfer,

would be a chargeable gain and would, by virtue of section 10(3), form part of its profits for corporation tax purposes.

5

In this section “company” and “group” have the meanings which would be given by section 170 if subsections (2)(a) and (9) of that section were omitted.