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HMRC internal manual

Capital Gains Manual

Depreciatory intra-group dividends: asset severance test

TCGA92/S31 (8)

The asset severance test is in TCGA92/S31 (8) and TCGA92/S33 (9). Immediately after the Section 30 disposal the asset which was the subject of the asset transaction must be owned by a person other than the company making that disposal or a company in the same group. This provision was being exploited by means of the `offshore sandwich’ device. Amendments were introduced in FA 1999 to counteract this device.

Finance Act 2011 introduced a new Targeted Anti-Avoidance Rule for disposals of shares and securities by companies on or after 19 July 2011. See CG48500+.