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HMRC internal manual

Capital Gains Manual

Building Societies: transfer of whole business to a company

TCGA92/S216, TCGA92/S217 (5)

TCGA92/S216 applies where a society transfers the whole of its business to a successor company in accordance with Section 97 and the other applicable provisions of the Building Societies Act 1986. Broadly, the effects of the section are as follows.

  • To allow assets to be transferred at no gain/no loss between the society and the successor company where they are not members of the same group at the time of transfer, Section 216(2)(a).
  • To prevent TCGA92/S178 and TCGA92/S179 from applying as respects certain assets where

    • any company ceases to be a member of the same group as the society because of the transfer, Section 216(2)(b)
    • the society and the successor company are members of the same group at the time of the transfer but later cease to be so, Section 216(3).
  • To create a charge under TCGA92/S178 or TCGA92/S179 in respect of certain assets where a company leaves the successor’s group, having previously belonged to the same group as the society, Section 216(4) and (5) - there is an exception to the charge in certain circumstances, Section 216(6).

Where, in connection with the transfer, the society disposes of any shares in the successor company, any gains arising on the disposal are not chargeable gains, Section 217(5).

References above to “group” are to a group as defined by TCGA92/S170. This definition was amended by FA2000/SCH29/PARA1, which removed the restriction that only companies resident in the UK could be members of a group. For the purposes of TCGA92/S216, for transfers from a Building Society to a company before 1 April 2000 the group is defined by reference to TCGA92/S170 before the changes in FA2000 (UK resident companies only), and for transfers after that date by reference to TCGA92/S170 after the changes in FA2000 (companies resident anywhere in the world).