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HMRC internal manual

Corporate Finance Manual

Derivative contracts: group continuity: series of transactions

Indirect transfer of a derivative contract

The group continuity rule applies where an intra-group transfer takes place as a result of a series of transactions.

The rule may be relevant where there are back-to-back arrangements for the transfer of a derivative contract.

For instance, rather than A and C transferring the contract between themselves the contract may first be transferred to a third party B. This will be within the rule provided that the series of transactions has the same effect as a related transaction. The rule is unlikely to apply where there is a significant delay between the transfers from A to B and B to C.

In order for the rule to apply, the transferor and transferee (A and C, in this example) must be in the same group and both within the charge to corporation tax. There is no requirement for any intermediary, such as B, to meet these conditions. So the rule will apply to a transfer even if intermediate steps involve, for example, a non-resident company, or an individual.