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HMRC internal manual

Double Taxation Relief Manual

Non-residents: UK income: Co reconstructions/amalgamations

Where, on a company reconstruction or amalgamation, the assets of one company are transferred to another company in the same group, TCGA92/S139 provides that no gain or loss accrues to the company making the disposal and the acquiring company is treated as having acquired the assets at their cost to the disposing company. One of the conditions for the application of the Section is that both companies must be resident in the United Kingdom. Where a non-resident company which has a permanent establishment in the United Kingdom transfers the assets of that permanent establishment to a United Kingdom resident company, it is not considered that the non-discrimination Article in an agreement permits Section 139 to apply to the transaction. Although the Article may have the effect of treating the permanent establishment of the foreign company in the same way as a United Kingdom company, the assets of the permanent establishment are not deemed to be the assets of a United Kingdom company. They remain the property of the non-resident company so that there is a transfer between a non-resident company and a United Kingdom resident company.