Finance Act 1996

[F1 12H (1) This paragraph applies in relation to a transfer of a business, or a part of a business, where— U.K.

(a) the transfer is of a kind [F2 mentioned in paragraph 12D(1) or (2) (or which would be of such a kind] if the business, or the part of the business, transferred were carried on by the transferor in the United Kingdom and [F3 the condition] mentioned in paragraph 12D(1)(d) were satisfied in relation to the transferee, or each of the transferees), and

(b) either the transferor or the transferee, or one of the transferees, is a transparent entity.

(2) Where this paragraph applies—

(a) if the transferor is a transparent entity, paragraphs [F4 12D and 12G] do not apply in relation to the transfer;

(b) if a transferee is a transparent entity, paragraph [F5 12G] does not apply in relation to the transfer to it.

(3) If, as a result of a transfer to which this paragraph applies, a transfer profit would, but for the Mergers Directive, have been chargeable to tax under the law of a member State other than the United Kingdom, Part 18 of the Taxes Act 1988 (double taxation relief), including any arrangements having effect by virtue of section 788 of that Act (bilateral relief), shall apply as if that tax, calculated in accordance with sub-paragraph (5), had been chargeable.

(4) In sub-paragraph (3) “transfer profit” means a profit accruing to a transparent entity in respect of a loan relationship (or which would be treated as accruing to that entity were it not transparent) by reason of a transfer of assets [F6 or liabilities representing a loan relationship] by the transparent entity to the transferee.

(5) Tax is calculated in accordance with this subsection if—

(a) so far as permitted under the law of the relevant member State, losses arising on the transfer [F7 of those assets or liabilities] are set against profits arising on the transfer [F7 of those assets or liabilities], and

(b) any relief available under that law has been claimed.]

Textual Amendments

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

F2 Words in Sch. 9 para. 12H(1)(a) 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. 9(2)(a)

F3 Words in Sch. 9 para. 12H(1)(a) 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. 9(2)(b)

F4 Words in Sch. 9 para. 12H(2)(a) 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. 9(3)(a)

F5 Word in Sch. 9 para. 12H(2)(b) 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. 9(3)(b)

F6 Words in Sch. 9 para. 12H(4) 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. 9(4)

F7 Words in Sch. 9 para. 12H(5)(a) 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. 9(5)