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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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ETMD: transfer or division of a UK business: main conditions for section 140A to apply

As explained at CG45702, there are conditions within TCGA 1992 section 140A which are common to transfers of assets and partial divisions. One such condition is at section 140A(1)(e) and whether it is met depends on the residence of the transferee company or companies. Where the transferee company or companies are not resident in the United Kingdom immediately after the transfer, then in order for the condition to be met any chargeable gain accruing on disposal of the transferred assets have to form part of the transferee’s profits for corporation tax purposes within section 10B; section 140A(2), see CG42100+.

The other common condition is that where the transferee company or companies are resident in the United Kingdom immediately after the transfer then in order for the condition to be met the effect of any double taxation relief arrangements must not result in the transferee company not being liable to UK tax on gains which accrue on their disposal; section 140A(3).

Note:

  • Section 140A(4)(b) prevents section 25 affecting the no gain no loss treatment. See CG42200
  • SI 2007 No. 3186 repealed sections 140A(5), (6) and (7) but they were replaced by a general interpretation section 140L, see subsections (2)(a), (b) and (1)(b) respectively. CG45730 provides guidance on section 140L.