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HMRC internal manual

Company Taxation Manual

Distributions: demergers: reference to Clearance Team

Demergers are a complex area and officers should not take action in connection with any return, information or assessment relating to demergers without guidance from the Clearance and Counteraction Team, Counter-Avoidance or Specialist PT Capital Gains Technical Group. The Clearance and Counteraction Team may be telephoned on 03000 589004.

Clearance given under CTA10/S1091

  • HMRC Clearance and Counteraction Team publishes for officers details of clearances given under CTA10/S1091 (see CTM17260) and will provide additional information including a copy of the application and any supporting documents on request.
  • Officers should not routinely open an enquiry into a CT return simply to check that the demerger took place precisely as proposed, but should use the opportunity if an enquiry is opened for other reasons. If it seems the demerger did not take place precisely as proposed contact the Clearance and Counteraction Team as above.
  • In particular, if it appears that there was any intention at the time of the demerger:

    • to cease or sell off a trade (whether demerged or retained by the distributing company), or
    • to change control of a company,

    contact the Clearance and Counteraction Team. The return from the distributing company required under CTA10/S1095 should be obtained.

    Officers should also seek to identify any chargeable payments made within five years of the demerger (see below and CTM17290). Report any chargeable payments for which clearance under CTA10/S1092 has not been given to the Clearance and Counteraction Team.

    Clearance refused under CTA10/S1091

    Where HMRC has refused clearance under CTA10/S1091 the Clearance and Counteraction Team will advise and may ask for a report.

    Clearance under CTA10/S1092

    Where HMRC has given clearance under CTA10/S1092 in respect of a potential chargeable payment, the Clearance and Counteraction Team may ask the local office to pursue the return required from the person making the chargeable payment under CTA10/S1096.

    Where a chargeable payment is made, the local office dealing with the company or other person making the payment should:

    • check that the payer, if a company, has deducted and accounted for tax under ITA07/PART15/CHAPTER15,
    • check that a non-company payer has deducted and accounted for tax under ITA07/PART15/CHAPTER16,
    • pursue the necessary return of amounts and recipients,
    • inform local offices dealing with the recipients so that they can consider liability under CTA10/S1086,
    • reinstate any charge under TCGA92/S178 or TCGA92/S179, which had previously been lifted by the demerger legislation.