Finance Act 1996

[F1 12D (1) This paragraph applies where— U.K.

(a) a company resident in one member State transfers to a company resident in another member State the whole or part of a business carried on in the United Kingdom,

(b) the transfer is wholly in exchange for shares or debentures issued by the transferee to the transferor,

(c) the transferor and the transferee each make a claim under this paragraph, and

[F2 (d) the transferee—

(i) is resident in the United Kingdom immediately after the transfer, or

(ii) is within the charge to corporation tax immediately after the transfer in accordance with section 11 of the Taxes Act 1988.]

(2) This paragraph also applies where a company transfers part of its business to one or more companies if—

(a) the transferor is resident in one member State,

(b) the part of the transferor's business which is to be transferred is carried on by the transferor in the United Kingdom,

(c) at least one transferee is resident in a member State other than that in which the transferor is resident (and each transferee is resident in a member State, but not necessarily the same one),

(d) the transferor continues to carry on a business,

(e) the conditions in sub-paragraph (1)(c) and (d) are satisfied (for which purpose references to the transferee shall be treated as references to each of the transferees), and

(f) either of the following conditions is satisfied.

(3) Condition 1 is that the transfer is made in exchange for [F3 the issue of] shares in or debentures of each transferee company to the persons holding shares in or debentures of the transferor.

(4) Condition 2 is that the transfer is not made in exchange for the issue of shares in or debentures of each transferee by reason only, and to the extent only, that a transferee is prevented from complying with Condition 1 by section 658 of the Companies Act 2006 (rule against limited company acquiring own shares) or by a corresponding provision of the law of another member State preventing the issue of shares or debentures to itself.

F4 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) Where this paragraph applies, in determining [F5 the] credits and debits to be brought into account for the purposes of this Chapter in respect of a loan relationship, if an asset or liability which represents the loan relationship is transferred in the course of the transfer of the business or part mentioned in sub-paragraph (1) or (2), the transferor and the transferee companies shall be treated as having entered into the transfer for a consideration equal to the notional carrying value (within the meaning given by paragraph 12(2)) of the asset or liability.

(7) Paragraph 12(2A) F6 shall have effect (with any necessary modifications) in relation to this paragraph as it has effect in relation to paragraph 12.]

Textual Amendments

F1 Sch. 9 paras. 12D-12G and cross-heading inserted (with effect in accordance with reg. 3(1) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 1 para. 16 (as modified (retrospectively) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), regs. 1(2), 4(1)

F2 Sch. 9 para. 12D(1)(d) substituted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), reg. 1(2), Sch. 2 para. 5(2)

F3 Words in Sch. 9 para. 12D(3) inserted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), reg. 1(2), Sch. 2 para. 5(3)

F4 Sch. 9 para. 12D(5) omitted (with effect in accordance with reg. 3 of the amending S.I.) by virtue of The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), reg. 1(2), Sch. 2 para. 5(4)

F5 Word in Sch. 9 para. 12D(6) inserted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), reg. 1(2), Sch. 2 para. 5(5)

F6 Paragraph 12(2A) was inserted by paragraph 29 of Schedule 25 to the Finance Act 2002.

Modifications etc. (not altering text)

C1 Sch. 9 para. 12D(4) modified (temp.) (8.7.2008) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), regs. 1(2), 6(1), Sch. 4 para. 3(c) (with reg. 6(2))