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HMRC internal manual

Capital Gains Manual

Company reconstructions where there is a transfer of business: company: TCGA92 S139: basic conditions


TCGA92/S139 applies where

  • a scheme of reconstruction involves the transfer of the whole or part of a company’s business to another company,
  • the scheme either

    • is a “scheme of reconstruction” within the meaning of Schedule 5AA (see CG52707), if the issue of shares and debentures takes place on or after 17 April 2002, or
    • is a “scheme of reconstruction or amalgamation” within the meaning of old TCGA92/139(9) (see CG52831 and CG52730+), if the issue takes place before 17 April 2002
  • for disposals before 1 April 2000, at the time of the transfer both companies are resident in the UK, or, for disposals on or after 1 April 2000, the assets remain within the scope of the charge to UK corporation tax
  • the transferor company receives no consideration for the transfer except that the transferee company may take over any of the liabilities of its business, see CG52806

TCGA92/S139 does not apply to

  • a transfer of certain assets to dual resident companies, see CG52817
  • a transfer of trading stock. This should be dealt with under the normal rules for trade profits, Section 139(2)
  • a transfer to an exempt unit trust, an authorised unit trust or an approved investment trust, see CG52819.

Guidance on the definition of a scheme of reconstruction are given at CG52707+ with examples at CG52720+. As explained in those paragraphs TCGA92/S139 goes hand in hand with TCGA92/S136. Section 136 applies to the shareholders involved in the scheme of reconstruction and Section 139 to the company. The clearance team, Counter-Avoidance Directorate deal with statutory clearances and can tell you whether one has been accepted or refused.