Corporation tax - Chapter 28 - 30 Flashcards
Group capital gains, De-grouping charges and SSE
What are the 3 conditions stated in s.179 TCGA 1992 for a de-grouping charge to arise?
- Company A acquires an asset from Company B at a time when both Company A and Company B are members of the same group;
- Company A and Company B are both UK resident; and
- Company A ceases to be a member of that group within 6 years after the acquisition.
In which company does the de-grouping charge arise and how is it calculated?
The charge arises in the selling company and added to the sales consideration.
The gain is calculated by treating the asset as being sold and reacquired at market value on the day the asset was transferred.
What are the 2 conditions for SSE to be applicable?
- There must be at least a 10% stake held throughout a period of 12 months in the last 6 years of ownership; and
- The company being sold is a trading company throughout the 12 month holding period.
What is the treatement when an fixed asset is transferred to a group member then taken to stock?
Can any elections be made?
It is firstly transferred at NG/NL.
It is then appropriated to stock at market value and a chargeable gain or loss will arise on the member who received the asset.
An election can be made to appropriate the asset to stock at indexed cost however this cannot be done where an allowable loss arises on the transfer.
What is the treatement when stock is transferred to a group member then taken to fixed assets?
It is apprpriated to fixed assets at market value giving a trade profit/loss.
Future transfers will then be at NG/NL.
What is the treatement for ‘share for share’ exchanges?
The seller acquires the new shares at the cost of the original shares.
The issuer of the new shares acquires the transferred shares at market value.
