Finance Act 2002

Payments between group members in respect of reliefs U.K.

71 (1) This paragraph applies to payments—

(a) for group roll-over relief, or

(b) for the reallocation of a degrouping charge.

(2) A payment for group roll-over relief means a payment made—

(a) in connection with a claim for relief under Part 7 (roll-over relief in case of realisation and reinvestment) made by virtue of—

(i) paragraph 56 (realisation by one group company and reinvestment by another), or

(ii) paragraph 57 (acquisition of group company treated as equivalent to acquisition of underlying assets),

(b) by the company whose proceeds of realisation are reduced as a result of the claim,

(c) to a company whose acquisition costs are reduced (in a case within paragraph 56) or the tax written-down value of whose assets is reduced (in a case within paragraph 57) as a result of the claim,

(d) in pursuance of an agreement between those companies in connection with the claim.

(3) A payment for the reallocation of a degrouping charge means a payment made—

(a) in connection with an election under paragraph 66 (reallocation of degrouping charge within group),

(b) by the company to which the chargeable realisation gain accrues to the company to which as a result of the election the whole or part of that gain is treated as accruing,

(c) in pursuance of an agreement between those companies in connection with the election.

(4) A payment to which this paragraph applies—

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

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

provided it does not exceed the amount of the relief.

(5) For this purpose the amount of the relief is—

(a) in the case of a payment in connection with a claim for relief under paragraph 56, the amount of the reduction as a result of the claim in the acquisition costs of the company to which the payment is made;

(b) in the case of a payment in connection with a claim for relief under paragraph 57, the amount of the reduction as a result of the claim in the tax-written down value of the assets of the company to which the payment is made;

(c) in the case of a payment in connection with an election under paragraph 66, the amount treated as a result of the election as accruing to the company to which the payment is made.