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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
Updated
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Distributions: demergers: action required in offices

If an officer receives:

  • a clearance application in connection with a demerger, under CTA10/S1091, or
  • a clearance application in respect of a potential chargeable payment following a demerger, under CTA10/S1092, or
  • a return under CTA10/S1095, and guidance has not yet been provided by the Clearance and Counteraction Team, Counter-Avoidance

the following procedure applies.

Clearance application for proposed demerger - CTA10/S1091

Officers should immediately forward a clearance application under CTA10/S1091 to:

HM Revenue & Customs
Clearance and Counteraction Team, Counter-Avoidance
CTIS Clearance S0528
PO Box 194
Bootle L69 9AA
Telephone 03000 589004
Fax 03000 569802

Officers should send the applicant a letter explaining the action taken in the following terms:

‘I refer to the application for clearance you sent me. Please note that all such applications must be made “to the Board” and not to the local Area Office. I have sent the application to the Clearance and Counteraction Team, [address as above]. The 30 day time limit within which HMRC are expected to reply will begin when the application is received by the team.’

If appropriate refer the applicant to the Annex to SP13/80 (available on the HMRC website).

It is not possible to make a demerger clearance application under CTA10/S1091 retrospectively.

If a company carries out a demerger without obtaining advance clearance, the tax implications of the transactions are dealt with on normal lines. Relief under CTA10/S1075 may or may not be due, depending on the circumstances.

Officers should refer such cases to the Clearance and Counteraction Team for advice concerning the possible application of CTA10/S1075 with the file and a brief summary of the transactions.

Officers might receive joint or similar applications for clearance under this or other provisions. Other provisions include:

  • TCGA92/S138 (capital reconstruction - see CG52631), TCGA92/S139 (5) (capital reconstruction involving transfer of business - see CG52810), CTA10/S748 and ITA07/S701 (transactions in securities - see CTM36880), and CTA10/S1044 (purchase of own shares - see CTM17570).
  • If there is more than one application officers should forward them all to the Clearance and Counteraction Team.

Clearance application in respect of a potential chargeable payment following a demerger CTA10/S1092

Officers should deal with a chargeable payment clearance application in the same way as for a demerger clearance but without enclosing a copy of SP13/80. Officers should immediately forward the application to the Clearance and Counteraction Team.

Returns CTA10/S1095

HMRC Clearance and Counteraction Team publish for officers a list of clearances given and refused. See CTM17260. Where officers receive a return under CTA10/S1095 (exempt distribution) or CTA10/S1096 (chargeable payment) the list should be checked to see whether clearance has been given. If clearance has not been sought or has been refused officers should send the return immediately to the Clearance and Counteraction Team together with a copy of any accompanying correspondence.