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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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ETMD: merger leaving assets within the UK charge: scope of section 140E

TCGA 1992 section 140E was originally enacted by section 51(1) F(No 2)A 2005 to accommodate mergers to form a European Company, a Societas Europaea or SE. SI 2007 No. 3186 came into force on 27 November 2007 and it introduced considerable changes to section 140E so that it now includes mergers to form a European Cooperative Society or ECS and other types or merger within the ETMD. These various types of merger are described further at CG45707-CG45712.

Section 140E applies to mergers to form a SE which take place on or after 1 April 2005.

The changes introduced by SI 2007 no. 3186 are effective for mergers to form a SE or SCE which take place on or after 18 August 2006 and for all other mergers which take place on or after 1 January 2007.

The European regulations governing an SE and an SCE only involve ‘company law’. The taxation aspects are covered in the ETMD.

The function of section 140E is that where the necessary criteria are met it permits a no gain no loss treatment at the asset tier on the transfer of assets. ‘For ‘roll over’ treatment of any gain at the shareholder tier see CG45720.