Finance Act 2022

Corporation tax consequences of becoming a QAHC U.K.

17 (1) For the purposes of corporation tax, when a company becomes a QAHC—

(a) a new accounting period begins at the beginning of the day on which it becomes a QAHC, and

(b) accordingly, its previous accounting period ends at the end of the day before it became a QAHC.

(2) The following are to be treated, for the purposes of corporation tax, as sold by a company immediately before becoming a QAHC and reacquired immediately after so becoming—

(a) any overseas land it holds;

(b) any loan relationship or derivative contract the company is party to for the purposes of an overseas property business of the company, to the extent (apportioned on a just and reasonable basis)—

(i) the relationship or contract is attributable to those purposes, and

(ii) profits arising from that relationship or contract will be exempt from corporation tax as a result of paragraph 52(4);

(c) any qualifying shares (see paragraph 53) it holds.

(3) The sale and reacquisition deemed under sub-paragraph (2) is to be treated as being for a consideration equal to the market value of the assets.

(4) Where—

(a) a company (“C”) becomes a QAHC,

(b) C holds a substantial shareholding in another company (see Schedule 7AC to TCGA 1992) as a result of holding qualifying shares,

(c) those shares were subject to a deemed sale and reacquisition under sub-paragraph (2),

(d) at the time of the deemed sale, the shares had been held by C for less than 12 months,

(e) C continues to hold those shares until they have been held for a period of 12 months (whether or not C remains a QAHC at the end of that period), and

(f) if C were to dispose of them immediately after the end of that period, any gain on that disposal would not be a chargeable gain as a result of an exemption under Part 1 of Schedule 7AC to TCGA 1992 (exemptions for disposals by companies with substantial shareholding),

any gain accruing to C on the deemed sale of the shares is not a chargeable gain.

(5) But for the purposes of sub-paragraph (4)(f), Schedule 7AC to TCGA 1992 has effect as if—

(a) paragraph 9 of that Schedule (aggregation of holdings of group companies) were omitted, and

(b) in paragraph 19(1), the references to the time of the disposal were instead to the end of the 12 month period referred to in sub-paragraph (4)(e).

(6) Paragraph 11 of Schedule 7AC to TCGA 1992 (effect of deemed disposal and reacquisition) has effect as if any reference to a “deemed disposal and reacquisition” did not include a deemed sale and reacquisition under sub-paragraph (2) of this paragraph.