IFM40520 - Group issues: acquisition of assets

FA22/SCH2/PARA33

Transfer of group assets into and out of a QAHC ring fence business

A company may be able to transfer an asset to another group company on a tax neutral basis. The QAHC regime disapplies these tax neutral rules in certain circumstances where assets are transferred into/out from a QAHC ring fence from/to a group company. This is because the QAHC regime provides tax benefits to companies that are QAHCs and therefore at certain points, particular assets must be rebased.

Adjustments to the tax neutral transfer rules occur where there is a transfer of the following assets:

  • overseas land (IFM40920);
  • any loan relationship or derivative contract the QAHC will, following its acquisition, be party to for the purposes of an overseas property business of the QAHC (IFM40820);
  • any qualifying shares (IFM40930);
  • any other asset that will, as a result of the disposal, be within the QAHC ring fence business of the QAHC.

Under the following circumstances:

  • where another group company makes the transfer into the QAHC ring fence business of a QAHC, except where the transfer is from the QAHC ring fence business of another QAHC; or
  • where a QAHC makes the transfer from its QAHC ring fence business into another group company, except where the transfer is into the QAHC ring fence business of another QAHC.

For the purposes of the above types of asset transfer, a company will be considered a group company if they meet the requirements of TCGA92/S170 (see CG45100p).

If any of the above asset transfers take place then the following tax neutral transfer rules will not apply, which will likely result in the transfer being treated as a chargeable event:

  • TCGA92/S171 (transfers within a group: general provisions) (CG45300p).
  • CTA09/S336 (transfers of loans on group transactions) (CFM34010).
  • CTA09/S625 (group member replacing another as party to derivative contract) (CFM53010).

Different rules apply where assets are transferred into or out from a ring fence within the same QAHC, see IFM40370 and IFM40375.