169LARelevant business assets: goodwill transferred to a related party etc

1

Subsection (4) applies if—

a

as part of a qualifying business disposal, a person (“P”) disposes of goodwill directly or indirectly to a close company (“C”),

b

at the time of the disposal, P is a related party in relation to C, and

c

P is not a retiring partner.

2

P is a related party in relation to C for the purposes of this section if P is a related party in relation to C for the purposes of Part 8 of CTA 2009 (intangible fixed assets) (see Chapter 12 of that Part (related parties) and, in particular, section 835(5) of that Act).

3

P is a retiring partner if the goodwill is goodwill in a business carried on, immediately before the disposal, by a partnership of which P is a member and at the time of the disposal—

a

P is not, and no arrangements exist under which P could become, a participator in C or in a company that has control of, or holds a major interest in, C (a “relevant participator”),

b

P is a related party in relation to C because P is an associate of one or more relevant participators, and

c

P is only an associate of each of those relevant participators because they are also members of the partnership.

4

For the purposes of this Chapter, the goodwill is not one of the relevant business assets comprised in the qualifying business disposal.

5

If a company—

a

is not resident in the United Kingdom, but

b

would be a close company if it were resident in the United Kingdom,

the company is to be treated as being a close company for the purposes of this section (including for the purposes of determining whether a person is a related party in relation to the company for the purposes of this section).

6

If a person—

a

disposes of goodwill as part of a qualifying business disposal, and

b

is party to relevant avoidance arrangements,

subsection (4) applies (if it would not otherwise do so).

7

In subsection (6) “relevant avoidance arrangements” means arrangements the main purpose, or one of the main purposes, of which is to secure—

a

that subsection (4) does not apply in relation to the goodwill, or

b

that the person is not a related party (for whatever purposes) in relation to a company to which the disposal of goodwill is directly or indirectly made.

8

In this section—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

• “associate”, “control”, “major interest” and “participator” have the same meaning as in Chapter 12 of Part 8 of CTA 2009 (see, in particular, sections 836, 837 and 841 of that Act).