PART 1Income Tax, Corporation Tax and Capital Gains Tax
CHAPTER 5Other provisions
Disincorporation
61Effect of disincorporation relief
1
In Part 5 of TCGA 1992 (transfer of business assets), in Chapter 1 (general provisions), after section 162A insert—
Transfer of business from company to shareholders
162BDisincorporation relief: assets (including pre-FA 2002 goodwill)
1
This section applies where—
a
a company transfers its business to some or all of the shareholders of the company, and
b
a claim for disincorporation relief in respect of the transfer has been made under section 58 of the Finance Act 2013.
2
The disposal and acquisition of any qualifying asset of the business included in the transfer is to be deemed to be for a consideration equal to the lower of—
a
the sums allowable under section 38 as a deduction in the computation of the gain accruing to the company on the disposal of the asset in question, and
b
the market value of the asset.
3
In subsection (2) a “qualifying asset” means—
a
goodwill, or
b
an interest in land which is not held as trading stock.
4
But subsection (2) does not apply to the goodwill of the business if section 162C applies to it.
162CDisincorporation relief: post-FA 2002 goodwill
1
This section applies where—
a
a company transfers its business to some or all of the shareholders of the company,
b
a claim for disincorporation relief in respect of the transfer has been made under section 58 of the Finance Act 2013, and
c
section 849A of CTA 2009 (disincorporation relief: transfer values for post-FA 2002 goodwill) applies to the transfer of the goodwill of the business.
2
The acquisition of the goodwill of the business is deemed to be for a consideration equal to the value at which the goodwill is treated as transferred by virtue of section 849A of CTA 2009.
2
In Part 8 of CTA 2009 (intangible fixed assets), Chapter 13 (transactions between related parties) is amended as follows.
3
In section 844 (overview of Chapter), in subsection (2) for “849” substitute “
849A
”
.
4
In section 845 (transfer between company and related party treated as at market value), in subsection (4) (exceptions to basic rule)—
a
omit the “and” at the end of paragraph (ca), and
b
after paragraph (d) insert
, and
e
section 849A (disincorporation relief: transfer values for post-FA 2002 goodwill).
5
After section 849 insert—
849ADisincorporation relief: transfer values for post-FA 2002 goodwill
1
This section applies where—
a
a company transfers its business to some or all of the shareholders of the company, and
b
a claim for disincorporation relief in respect of the transfer has been made under section 58 of the Finance Act 2013.
2
If section 735 applies to the transfer of the goodwill of the business, the transfer is treated for the purposes of this Part as being at the lower of—
a
the tax written-down value of the goodwill, and
b
its market value.
3
If section 736 applies to the transfer of the goodwill of the business, the transfer is treated for the purposes of this Part as being at the lower of—
a
the cost of the goodwill, and
b
its market value.
4
If section 738 applies to the transfer of the goodwill of the business, the proceeds of realisation of the goodwill are treated for the purposes of this Part as being nil.
5
In subsection (2)(a) the reference to the tax written-down value of the goodwill is to its tax written-down value immediately before the transfer.
6
In subsection (3)(a) “the cost of the goodwill” means the cost recognised for tax purposes (determined in accordance with section 736(6) and (7)).
7
In this section market value has the meaning given in section 845(5).
6
The amendments made by this section have effect in relation to a transfer of a business with a business transfer date of 1 April 2013 or a later date.