Corporation Tax Act 2010

1081 General conditions

(1) Condition A is that each relevant company must be resident in a member State at the time of the distribution.

(2) Condition B is that at the time of the distribution—

(a) the distributing company must be either a trading company or a member of a trading group, and

(b) each subsidiary whose shares are transferred as mentioned in section 1076(a) or 1077(1)(a)(ii) must be either a trading company or the holding company of a trading group.

(3) Condition C is that the distribution must be made wholly or mainly for the purpose of benefiting some or all of the trading activities which—

(a) before the distribution are carried on by a single company or group, and

(b) after the distribution will be carried on by two or more companies or groups.

(4) Condition D is that the distribution must not form part of a scheme or arrangement to which subsection (5) applies.

(5) This subsection applies to any scheme or arrangement the main purpose or one of the main purposes of which is—

(a) the avoidance of tax,

(b) the making of a chargeable payment (see section 1088),

(c) the making, in pursuance of a scheme or arrangements with a company (“A”) or with any of its main participators, of what would be a chargeable payment if A were an unquoted company,

(d) the acquisition by any person or persons, other than the members of the distributing company, of control of—

(i) the distributing company,

(ii) any other relevant company, or

(iii) any company which belongs to the same group as the distributing company or any other relevant company,

(e) the cessation of a trade after the distribution, or

(f) the sale of a trade after the distribution.

(6) Subsections (5)(b) and (c) are without prejudice to the width of subsection (5)(a).

(7) In subsection (5)—

• “group” means a company which has one or more 51% subsidiaries together with those subsidiaries,

• “main participators” has the meaning given by section 1089(1)(b), and

• “tax” includes stamp duty and stamp duty land tax.