Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
, see all updates

Company reconstructions: company: TCGA92 S139: anti-avoidance provisions and clearance procedure

The application of TCGA92/S139 is subject to anti-avoidance provisions. Section 139(5) provides Section 139 will not apply unless

  • the scheme of reconstruction or amalgamation is effected for bona fide commercial reasons and
  • does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoidance of liability to corporation tax, capital gains tax or income tax.

The anti-avoidance provisions of TCGA92/S139 are subject to an advance clearance procedure which is identical to that which applies to TCGA92/S135 and TCGA92/S136. Instructions on the clearance procedures can be found at CG52631.

You should contact the clearance team, Counter-Avoidance Directorate to check whether clearance has been given or refused. If Section 136 and Section 139 apply to the same transactions their notification covers both sections.

The procedure for dealing with computations prepared on the basis that TCGA92/S139 applies is set out below: -

1. Are the second and third conditions in CG52803 satisfied? If No - Section 139 does not apply If Yes, go to (2) below
     
1. Do any of the restrictions listed in CG52803 apply? If Yes - Section 139 does not apply If No, go to (3) below
1. Has the clearance team, Counter-Avoidance Directorate advised clearance has been granted or refused?    
See Note 1                  | If No - send a report and your file to the clearance team, Counter-Avoidance Directorate  | If Yes, go to (4) below                                                         | | 1. (4) Has the clearance team, Counter-Avoidance Directorate asked for a report before you accept Section 139 can apply?

See Note 2 | If Yes - send a report and your file to the clearance team, Counter-Avoidance Directorate | If No, go to (5) below                                                          | | 1. Was clearance granted?                                                                                                                | If No - Section 139 does not apply                                                        | If Yes, go to (6) below                                                         | | 1. Were the transactions carried out in accordance with the clearance application?                                                       | If No - send a report and your file to the clearance team, Counter-Avoidance Directorate  | If Yes, go to (7) below                                                         | | 1. On the information available did the clearance application fully and accurately describe the transaction                              | If No - send a report and your file to the clearance team, Counter-Avoidance Directorate  | If Yes - Section 139 applies subject to the conditions in the clearance stencil |

NOTE 1

All decisions on whether the anti-avoidance provisions prevent Section 139 applying are taken in Capital Gains Technical Group.

NOTE 2

This step deals with the question whether the transactions are a scheme of reconstruction or amalgamation. In practice the clearance team, Counter-Avoidance Directorate will consider this when dealing with the clearance application. The clearance procedure itself is only concerned with the anti-avoidance provisions. The clearance team will not advise the applicant that Section 139 will apply.