HMRC internal manual

Capital Gains Manual

Companies and Groups of Companies: Groups of compaanies: The degrouping charge: mergers: handling

You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.

Mergers within Section 181 typically arise in joint ventures between large groups.  Where there is genuine uncertainty as to whether the rule will apply to a proposed merger then a non-statutory clearance may be sought.

A non-statutory clearance application in relation to Section 181 may be -

  • enclosed with any application for statutory clearance made to HMRC’s Clearance & Counteraction Team in connection with the same transactions,
  • sent to the group’s Customer Compliance Manager, where appointed, or
  • sent to the non-statutory clearance team in Southend.

All such applications should be referred to Capital Gains Technical Group for advice.

Where there is an associated statutory clearance then the decision of the Clearance & Counteraction Team on that matter will also apply for Section 181 in respect of the commercial reasons and purpose of the proposed transactions (S181(1)(b)).

The UK is a key driver in the OECD’s Base Erosion and Profit Shifting (BEPS) project and a signatory to the EU Directive on Administrative Cooperation in the field of Taxation (the DAC); therefore, it is important that we are mindful of our international exchange of information obligations. A non-statutory clearance in respect of Section 181 is an agreement made between a tax authority and a customer, upon which the customer can rely. This makes it a “ruling” for international taxation purposes, meaning it is very likely to be exchangeable with another jurisdiction:

  1. automatically, under BEPS Action 5 (IEIM540010);
  2. automatically, under the DAC (IEIM550010); or
  3. spontaneuosly, where it would be foreseeably relevant to advice another jurisdiction (IEIM530010).

For more information, including whether, when and how to exchange such rulings, please consult IEIM500000 onwards. There may be information that you will need to collect from the customer, si it is important that you review the guidance on sharing rulings before you reply.