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HMRC internal manual

Stamp Taxes on Shares Manual

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HM Revenue & Customs
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Exemptions and reliefs: reliefs: company reconstructions and acquisitions - Section 75 - 'undertaking'

Undertaking

The term ‘undertaking’ refers to the business, trade or enterprise of the target company which is transferred as a going concern to be carried on substantially unchanged by the acquiring company. For there to be an undertaking it is implicit that some business must be carried on. The acquisition of a mere investment held by a trading company is not the acquisition of part of the company’s undertaking (Baytrust Holdings Ltd v IRC [1971] 3 All ER 76). It is doubtful whether the acquisition of assets of a trading company which are insufficient to comprise a viable business could be the acquisition of an undertaking or part undertaking. The holdings of investments may, however, constitute a business. The holding of a substantial block of shares in a trading company may constitute a business if the holding is large enough for a parent company/subsidiary company relationship to exist. It is not sufficient that what is transferred constituted a business of the target company. It must continue as a going concern.