Taxation of Chargeable Gains Act 1992, section 179

Company ceasing to be member of group: post-appointed day cases

Part VI Companies, oil, insurance etc.

[F1348 (1)This section applies where—

(a) a company (“company A”) acquires an asset from another company (“company B”) at a time when [F1349 company A and company B are members of the same group F1349] ,

(b)the conditions in subsection (1A) below are met, and

(c)company A ceases to be a member of that group within the period of six years after the time of the acquisition.

References in this section to a company ceasing to be a member of a group of companies do not apply to cases where a company ceases to be a member of a group in consequence of another member of the group ceasing to exist.

(1A)The conditions referred to in subsection (1)(b) above are—

(a)that company A is resident in the United Kingdom at the time it acquires the asset, or the asset is a chargeable asset in relation to that company immediately after that time, and

(b)that company B is resident in the United Kingdom at the time of that acquisition, or the asset is a chargeable asset in relation to that company immediately before that time.

F1350 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1348]

[F1351 (1AA) If shares in a company are transferred as part of the process of the transfer of a business to which section 140A or 140C applies and in consequence of the transfer the company ceases to be a member of a group (“Group 1”)—

(a)the company shall not be treated for the purposes of this section as having left Group 1, and

(b) if the transferee is a member of a group (“Group 2”) and in consequence of the transfer the company becomes a member of Group 2 it shall be treated, for the purposes of this section, as if Group 1 and Group 2 were the same. F1351]

[F1352 (1B) Where, as part of the process of a merger to which section 140E applies, a company which is a member of a group (“Group 1”) ceases to exist and in consequence of that cessation—

(a)assets are transferred to the transferee, or

(b)shares in one or more companies which were also members of the group are transferred to the transferee,

a company which has ceased to exist, or the shares in which have been transferred to the transferee, shall not be treated for the purposes of this section as having left Group 1.

(1C)If subsection (1B) applies in relation to a company then for the purposes of this section—

(a)the transferee and a company which has ceased to exist in consequence of the merger shall be treated as the same entity, and

(b) if the transferee is a member of a group (“Group 2”) following the merger (whether or not as the principal company of the group) a company which was a member of Group 1 and became a member of Group 2 in consequence of the merger shall be treated, for the purposes of this section, as if Group 1 and Group 2 were the same.

(1D) In subsections (1B) and (1C), “transferor” and “transferee” have the meaning given by section 140E(9). F1352]

[F1353 (2)Where two companies cease to be members of the group at the same time, subsection (1) does not have effect as respects the acquisition of an asset by one of the companies from the other if condition A or B is met.

(2ZA)Condition A is that the companies—

(a)are both 75 per cent subsidiaries and effective 51 per cent subsidiaries of another company on the date of the acquisition, and

(b)remain both 75 per cent subsidiaries and effective 51 per cent subsidiaries of that other company until immediately after they cease to be members of the group.

(2ZB)Condition B is that one of the companies—

(a)is both a 75 per cent subsidiary and an effective 51 per cent subsidiary of the other on the date of the acquisition, and

(b)remains both a 75 per cent subsidiary and an effective 51 per cent subsidiary of the other until immediately after the companies cease to be members of the group.F1353]

[F1354 (2A)[F1355 Subsection (2AA) applies whereF1355] —

[F1356 (a) a company (“company A”) acquired an asset from another company (“company B”) at a time when both company A and company B were members of the same group (“the first group”),

(aa)company A has ceased to be a member of the first group,F1356]

(b)subsection (2) above applies in the case of [F1357 company A’sF1357] ceasing to be a member of the first group so that subsection (1) above does not have effect as respects the acquisition of that asset,

[F1358 (c) at the time company A ceases to be a member of the first group there is a connection between that group and the group of companies of which company A becomes a member on leaving the first group ( “the second group” ), and

(d)subsequently—

(i)company A ceases to be a member of the second group, or

(ii)(before sub-paragraph (i) applies) there ceases to be a connection between the two groups.F1358]

[F1359 (2AA)Where this subsection applies—

(a)in a case within subsection (2A)(d)(ii), for the purposes of this section (other than subsection (2A)) as it applies as respects the acquisition, company A and any associated company are to be treated as having ceased to be members of the second group at the time the connection between the two groups ceases,

(b)subsection (1) has effect in relation to company A's ceasing to be a member of the second group as if it had been the second group of which both companies had been members at the time of the acquisition, and

(c)subsection (2) may operate to prevent subsection (1) applying by virtue of paragraph (b), unless subsection (2AB) applies.

(2AB)This subsection applies if company A's ceasing to be a member of the first group at the same time as one or more associated companies forms part of arrangements the main purpose, or one of the main purposes, of which is the avoidance of a liability to corporation tax.F1359]

(2B)For the purposes of subsection (2A) above there is a connection between the first group and the second group [F1360 at a particular time if, at that time,F1360] , the company which is the principal company of that group is under the control of—

(a)the company which is the principal company of the first group or, if that group no longer exists, which was the principal company of that group when [F1361 company AF1361] ceased to be a member of it;

(b)any [F1362 person or persons who control the company mentioned in paragraph (a) above or who have had it under theirF1362] control at any time in the period since [F1361 company AF1361] ceased to be a member of the first group; or

(c)any [F1363 person or persons who have, at any time in that period, had under theirF1363] control either—

(i)a company which would have [F1364 been a person fallingF1364] within paragraph (b) above if it had continued to exist, or

(ii)a company which would have [F1364 been a person fallingF1364] within this paragraph (whether by reference to a company which would have [F1364 been a person fallingF1364] within that paragraph or to a company or series of companies falling within this sub-paragraph).F1354]

[F1365 (2C)This section shall not have effect as respects any asset if, before the time when [F1361 company AF1361] ceases to be a member of the group or, as the case may be, the second group, an event has already occurred by virtue of which the company falls by virtue of section 101A(3) to be treated as having sold and immediately reacquired the asset at the time specified in subsection (3) below.F1365]

[F1366 (2D)This section shall not have effect as respects any asset if, before the time when [F1361 company AF1361] ceases to be a member of the group or, as the case may be, the second group, an event has already occurred by virtue of which the company falls by virtue of section 101C(3) to be treated as having sold and immediately reacquired the asset at the time specified in subsection (3) below.F1366]

(3)If, when [F1361company AF1361] ceases to be a member of the group, [F1361company AF1361] , or an associated company also leaving the group, owns, otherwise than as trading stock—

(a)the asset, or

(b)property to which a chargeable gain has been carried forward from the asset on a replacement of business assets,

then, subject to subsection (4) below, [F1361company AF1361] shall be treated for all the purposes of this Act as if immediately after its acquisition of the asset it had sold, and immediately reacquired, the asset at market value at that time.

[F1367 (3A)Any chargeable gain or allowable loss which would otherwise accrue to company A on the sale referred to in subsection (3) does not so accrue if—

(a)company A ceases to be a member of the group in consequence of—

(i)a disposal of shares in company A or another member of the group made by a member of the group, or

(ii)two or more such disposals,

(b)either—

(i)subsection (3B) applies to the disposal or, if there is more than one disposal, to at least one of them, or

(ii)sub-paragraph (i) does not apply but had subsection (3B) applied to the disposal or, if there is more than one disposal, to each of them, any gain arising on the disposal or disposals would not have been a chargeable gain by virtue of Schedule 7AC, and

(c)in the absence of this subsection, section 535 of CTA 2010 (UK REITS: exemption of gains) would not apply to the chargeable gain or allowable loss which would accrue to company A on the sale.

(3B)This subsection applies to a disposal of shares if—

(a)the company making the disposal is resident in the United Kingdom at the time of the disposal,

(b)the shares are chargeable assets in relation to that company immediately before that time, or

(c)any part of the chargeable gain or allowable loss accruing on the disposal is treated as a gain or loss accruing to a person by virtue of [F1368 section 3F1368] (attribution of gains to members of non-resident companies).

In this section “group disposal” means a disposal within subsection (3A)(a) to which this subsection applies and the company making the disposal is referred to as “the transferor company”.

(3C)For the purposes of subsections (3A) and (3B), the question whether there is a disposal is to be determined ignoring section 127 (share reorganisations etc treated as not involving disposal).

(3D)If subsection (3A) applies, any chargeable gain or allowable loss accruing to the transferor company on a group disposal (other than a group disposal to which section 127 applies) is to be calculated—

(a)where a chargeable gain would accrue to company A in the absence of subsection (3A), as if the amount of the consideration for the group disposal were increased by the amount of the gain, and

(b)where an allowable loss would accrue to company A in the absence of subsection (3A), as if an amount equal to the amount of the loss were a sum allowable under section 38 as a deduction in the computation of the gain or loss accruing on the group disposal.

(3E)If subsection (3A) applies, and section 127 applies to a group disposal, any chargeable gain or allowable loss accruing to the transferor company on a disposal of the new holding arising from the group disposal (or any part of that holding) is to be calculated—

(a)where a chargeable gain would accrue to company A in the absence of subsection (3A)—

(i)as if an amount equal to the amount of the gain were excluded from the expenditure allowable as a deduction under section 38 in the computation of the gain or loss accruing on the disposal (but not so as to reduce that expenditure below nil), and

(ii)where (ignoring sub-paragraph (i)) the amount of the gain exceeds the expenditure allowable as such a deduction, as if a gain equal to that excess accrued on the disposal of the new holding (or, if the disposal is of a part of the new holding, a gain equal to the corresponding part of that excess accrued on that disposal), in addition to any gain or loss that actually accrues on the disposal of the new holding or part, and

(b)where an allowable loss would accrue to company A in the absence of subsection (3A), as if an amount equal to the amount of the loss were a sum allowable under section 38 as a deduction in the computation of the gain or loss accruing on the disposal.

In this subsection “new holding” has the meaning given by section 126.

(3F)If there is more than one group disposal, the references in subsections (3D) and (3E) to the amount of the gain or loss which would accrue to company A in the absence of subsection (3A) are to be read, in relation to each disposal, as references to—

(a)such proportion of that amount as the transferor companies in relation to the group disposals jointly elect as the appropriate proportion in relation to the disposal in question, or

(b)where no election is made, the proportion of that amount attributable to that disposal if that amount is divided equally between the group disposals.

(3G)An election under subsection (3F) must—

(a)specify the appropriate proportion in relation to each group disposal, and

(b)be made, by notice to an officer of Revenue and Customs, no later than 2 years after the end of the first accounting period of a company in which any chargeable gain or allowable loss on a group disposal accrues.

(3H)If a group disposal by a company consists of shares of more than one class, then, for the purposes of subsections (3D) and (3E), the company may apportion any increase or deduction to be made between the classes of shares in such manner as it considers appropriate.F1367]

(4)Any chargeable gain or allowable loss[F1369 accruingF1369] to [F1370company AF1370] on the sale referred to in subsection (3) above shall be treated as accruing to [F1370company AF1370][F1371 at whichever is the later of the following, that is to say—

(a)the time immediately after the beginning of the accounting period of that company in which or, as the case may be, at the end of which the company ceases to be a member of the group; and

(b)the time when under subsection (3) above it is treated as having reacquired the asset;

[F1372 and sections 138 to 142 of CTA 2010 have effect accordingly as if the actual circumstances were as they are treated as having beenF1372] .F1371]

[F1373 (5)Subsections (6) to (8) apply where—

(a)in the absence of subsection (6), company A would be treated by virtue of subsection (3) as selling an asset at any time, by reason of ceasing to be a member of the group, and

(b)company A ceases to be a member of the group by reason only of the fact that the principal company of that group becomes a member of another group.F1373]

(6)[F1374 Subsection (3) does not apply to treat company A as selling the asset at that time; butF1374] if—

(a) within 6 years of that time [F1375 company A F1375] ceases at any time (“the relevant time”) to satisfy the following conditions, and

(b)at the relevant time, [F1375company AF1375] , or a company in the same group as that company, owns otherwise than as trading stock the asset or property to which a chargeable gain has been carried forward from the asset on a replacement of business assets,

[F1375 company AF1375] shall be treated for all the purposes of this Act as if, immediately after its acquisition of the asset, it had sold and immediately reacquired the asset at the value that, at the time of acquisition, was its market value.

(7)Those conditions are—

(a)that [F1376company AF1376] is a 75 per cent. subsidiary of one or more members of the other group referred to in subsection (5) above, and

(b)that [F1376company AF1376] is an effective 51 per cent. subsidiary of one or more of those members.

[F1377 (7A)Any chargeable gain or allowable loss which would otherwise accrue to company A on the sale referred to in subsection (6) does not so accrue if—

(a)company A ceases at the relevant time to satisfy the conditions in subsection (7) in consequence of—

(i)a disposal of shares in company A, or another member of the other group mentioned in subsection (5)(b), made by a member of that other group, or

(ii)two or more such disposals,

(b)either—

(i)subsection (3B) applies to the disposal or, if there is more than one disposal, to at least one of them, or

(ii)sub-paragraph (i) does not apply but had subsection (3B) applied to the disposal or, if there is more than one disposal, to each of them, any gain arising on the disposal or disposals would not have been a chargeable gain by virtue of Schedule 7AC, and

(c)in the absence of this subsection, section 535 of CTA 2010 (UK REITS: exemption of gains) would not apply to the chargeable gain or allowable loss which would accrue to company A on the sale.

(7B) Where subsection (7A) applies, subsections (3C) to (3H) apply to the calculation of any chargeable gain or allowable loss accruing on a disposal within subsection (7A)(a) to which subsection (3B) applies (a “relevant disposal”) with the following modifications—

(a)in subsections (3C) to (3H) for the references to a group disposal substitute references to a relevant disposal, and

(b)in subsections (3C), (3D) and (3E) for the references to subsection (3A) substitute references to subsection (7A).F1377]

(8)Any chargeable gain or allowable loss accruing to [F1378company A on the sale referred to in subsection (6) is to be treated as accruing immediately before the relevant time.F1378]

(9)Where—

(a)by virtue of this section a company is treated as having sold an asset at any time, and

(b)if at that time the company had in fact sold the asset at market value at that time, then, by virtue of section 30 [F1379or 31F1379] , any allowable loss or chargeable gain accruing on the disposal would have been calculated as if the consideration for the disposal were increased by an amount,

subsections (3) and (6) above shall have effect as if the market value at that time had been that amount greater.

[F1380 (9A)[F1381 Sections 450 and 451 of CTA 2010F1381] (meaning of control) shall have effect for the purposes of subsection (2B) above as [F1382 they haveF1382] effect for the purposes of [F1383 Part 10 of CTA 2010F1383] ; but a person carrying on a business of banking shall not for the purposes of that subsection be regarded as having control of any company by reason only of having, or of the consequences of having exercised, any rights of that person in respect of loan capital or debt issued or incurred by the company for money lent by that person to the company in the ordinary course of that business.F1380]

(10)For the purposes of this section—

[F1384 (a)two companies are associated with each other if one is a 75 per cent subsidiary of the other or both are 75 per cent subsidiaries of another companyF1384] ,

(b)a chargeable gain is carried forward from an asset to other property on a replacement of business assets if, by one or more claims under sections 152 to 158, the chargeable gain accruing on a disposal of the asset is reduced, and as a result an amount falls to be deducted from the expenditure allowable in computing a gain accruing on the disposal of the other property,

(c)an asset acquired by [F1385company AF1385] shall be treated as the same as an asset owned at a later time by that company or an associated company if the value of the second asset is derived in whole or in part from the first asset, and in particular where the second asset is a freehold, and the first asset was a leasehold and the lessee has acquired the reversion.

[F1386 (10A) For the purposes of this section an asset is a “chargeable asset” in relation to a company at any time if any gain accruing to the company on a disposal of the asset by the company at that time—

(a)would be a chargeable gain [F1387 chargeable to corporation tax as a result of section 2B(3) or (4),F1387] or

(b)would, but for Schedule 7AC (exemptions for disposals by companies with substantial shareholdings), be within paragraph (a).F1386]

F1388 (11). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1388 (12). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13)Where under this section [F1389company AF1389] is to be treated as having disposed of, and reacquired, an asset, all such recomputations of liability in respect of other disposals, and all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section shall be carried out.

Definitions used in section 179 34

company

“company” includes any body corporate or unincorporated association but does not include a partnership, and shall be construed in accordance with section 99 ;

Defined in s.288(1) · see it in the full Act

(5) In this paragraph “company” and “group” shall be construed in accordance with section 170(2) to (9).

Defined in Sch.2 para.5(5) · see it in the full Act
assets

(a) the reference to “assets” were a reference to “property”, and

Defined in Sch.4ZA para.22(2) · see it in the full Act
asset

In this sub-paragraph “asset” includes part of an asset.

Defined in Sch.8B para.6(1) · see it in the full Act
company A

(3) Where sub-paragraph (1) applies to extend the period for which a company (“company A”) is treated as having held any shares, that company shall be treated for the purposes of this Part as having had at any time the same entitlement—

(a) to shares, and

(b) to any rights enjoyed by virtue of holding shares,

Defined in Sch.7AC para.10(3) · see it in the full Act

(a) a company (“company A”) disposes of an asset by way of a material transaction, and

Defined in s.19(6) · see it in the full Act
company B

(c) the disposal by company A is to a person who is connected with another company (“company B”) which at some time after 19th March 1985 disposed of the asset by way of an inter-group transfer, and

Defined in s.19(6) · see it in the full Act
group

(5) In this paragraph “company” and “group” shall be construed in accordance with section 170(2) to (9).

Defined in Sch.2 para.5(5) · see it in the full Act
the residents

(b) if 2 or more of them are then resident ... in the United Kingdom (“the residents”) it shall be treated as being as many equal capital payments as there are residents and each of them shall be treated as receiving one of the payments.

Defined in s.96(4) · see it in the full Act
resident

“resident” means resident in accordance with the statutory residence test in Part 1 of Schedule 45 to the Finance Act 2013 ;

Defined in s.288(1) · see it in the full Act
shares

“shares” includes stock;

Defined in s.288(1) · see it in the full Act

(5) In this paragraph, except in paragraphs (a) to (c) of sub-paragraph (6), “shares” includes an interest in shares.

Defined in Sch.7AC para.10(5) · see it in the full Act

(b) “shares” includes securities,

Defined in Sch.7 para.4(2) · see it in the full Act
the shares

(5) In sub-paragraphs (3) and (4) and in the following provisions of this Schedule references to “the shares” are to the shares referred to in sub-paragraph (1)(a).

Defined in Sch.7ZB para.1(5) · see it in the full Act

(a) references to “the shares” shall be construed in accordance with sub-paragraph (1) above, and

Defined in Sch.5B para.13(12) · see it in the full Act
subsidiary

(7) In subsection (4) above “subsidiary” has the meaning given by section 1159 of and Schedule 6 to the Companies Act 2006 and in subsections (5) and (6) above “participator” has the meaning given by section 454 of CTA 2010 , except that it does not include a loan creditor.

Defined in s.239(7) · see it in the full Act
the subsidiary

(7) For the purposes of this section and sections 171 to 181, a company (“the subsidiary”) is an effective 51 per cent. subsidiary of another company (“the parent”) at any time if and only if—

(a)the parent is beneficially entitled to more than 50 per cent. of any profits available for distribution to equity holders of the subsidiary; and

(b)the parent would be beneficially entitled to more than 50 per cent. of any assets of the subsidiary available for distribution to its equity holders on a winding-up.

Defined in s.170(7) · see it in the full Act
the first group

(a) the principal company of a group of companies (“the first group”) has at any time become a member of another group (“the second group”) so that the two groups are treated as the same by virtue of subsection (10) or (10A) of section 170, and

Defined in Sch.7A para.1(6) · see it in the full Act
the second group

(a) the principal company of a group of companies (“the first group”) has at any time become a member of another group (“the second group”) so that the two groups are treated as the same by virtue of subsection (10) or (10A) of section 170, and

Defined in Sch.7A para.1(6) · see it in the full Act
arrangements

“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and

Defined in s.16A(2) · see it in the full Act
tax

and for the purposes of this definition “tax” means capital gains tax, corporation tax or income tax.

Defined in s.16A(2) · see it in the full Act
control

Section 1124 of CTA 2010 (meaning of “control") applies for the purposes of this sub-paragraph.

Defined in Sch.5AA para.4(3) · see it in the full Act

(d) for the purposes of any attribution under section 451(4) (rights of a person's associates to be attributed to the person etc in determining “control”) the rights and powers of a person (“A”) are not to be attributed to another person (“P”) merely because A is a partner of P , and

Defined in Sch.5AAA para.46(2) · see it in the full Act

“control” shall be construed in accordance with sections 450 and 451 of CTA 2010 ;

Defined in s.288(1) · see it in the full Act
the event

(2) The receipt of the replacement value by the original supplier (“the event”) shall also be disregarded for the purposes of paragraph 13B above if—

(a) the event occurs before the start of the period of restriction, or

(b) in a case where the event occurs after the time the original recipient receives the original value, it does not occur as soon after that time as is reasonably practicable in the circumstances, or

(c) where an appeal has been brought by the individual against an assessment made by virtue of paragraph 3(1)(e) above by reason of that receipt, the event occurs more than 60 days after the appeal has been finally determined.

But nothing in paragraph 13B above or this paragraph requires the replacement value to be received after the original value.

Defined in Sch.5B para.13C(2) · see it in the full Act
trading stock

“trading stock” has the meaning given by section 163 of CTA 2009 ;

Defined in s.288(1) · see it in the full Act
property

(6) Sub-paragraphs (4) and (5) above apply for the purposes of paragraph (b) of sub-paragraph (1) above as they apply for the purposes of paragraph (a), reading “income” for “property".

Defined in Sch.5 para.2(6) · see it in the full Act

(a) the reference to “assets” were a reference to “property”, and

Defined in Sch.4ZA para.22(2) · see it in the full Act
market value

(5AA) In this Act “market value” in relation to shares of a given class in an open-ended investment company the prices of which are published regularly by the authorised corporate director of that company (whether or not those shares are also quoted in The Stock Exchange Daily Official List) shall mean an amount equal to the price so published on the relevant date, or if no price was published on that date, on the latest date before that date.

Defined in s.272(5AA) · see it in the full Act

(5) In this Act “market value” in relation to any rights of unit holders in any unit trust scheme the buying and selling prices of which are published regularly by the managers of the scheme shall mean an amount equal to the buying price (that is the lower price) so published on the relevant date, or if none were published on that date, on the latest date before.

Defined in s.272(5) · see it in the full Act

(1) In this Act “market value” in relation to any assets means the price which those assets might reasonably be expected to fetch on a sale in the open market.

Defined in s.272(1) · see it in the full Act

(4) In particular, for the purposes of paragraphs 5 and 7 of this Schedule “market value” has the meaning given by paragraph 92 of Schedule 2 to that Act (determination of market value); and Part 8 of this Act has effect subject to this paragraph.

Defined in Sch.7D para.1(4) · see it in the full Act
allowable loss

“allowable loss” shall be construed in accordance with sections 8(2) , 16 , 16A , 261B, 261D and 263ZA ;

Defined in s.288(1) · see it in the full Act

(1) For the purposes of this Act, “allowable loss” does not include a loss accruing to a person if—

(a)it accrues to the person directly or indirectly in consequence of, or otherwise in connection with, any arrangements, and

(b)the main purpose, or one of the main purposes, of the arrangements is to secure a tax advantage.

Defined in s.16A(1) · see it in the full Act
CTA 2010

“CTA 2010” means the Corporation Tax Act 2010 ;

Defined in s.288(1) · see it in the full Act
the new holding

and in paragraph (b) above “the original shares” and “the new holding” have the same meaning as they have for the purposes of sections 127 to 130.

Defined in s.116(1) · see it in the full Act
new holding

(5) In sub-paragraph (2) above “new holding” shall be construed in accordance with sections 126, 127, 135 and 136.

Defined in Sch.5B para.9(5) · see it in the full Act

(4) In sub-paragraph (1) “original shares” and “new holding” shall be construed in accordance with sections 126, 127, 135 and 136.

Defined in Sch.7AC para.14(4) · see it in the full Act
the appropriate proportion

(5) For the purposes of sub-paragraph (3) “the appropriate proportion” of an asset is equal to whatever would be, for the purposes of paragraph 16, the appropriate portion of any gain if it is assumed—

(a) that the company had sold the asset at the relevant time, and

(b) that the total consideration for that sale was such that it results in a gain of £100 accruing to it.

Defined in Sch.5AAA para.32(5) · see it in the full Act
an appropriate proportion

(5) In sub-paragraphs (2)(b), (3)(b) and (4)(b) “an appropriate proportion” means a proportion corresponding to the percentage of the ordinary share capital of the joint venture company held by the company concerned.

Defined in Sch.7AC para.23(5) · see it in the full Act
notice

“notice” means notice in writing;

Defined in s.288(1) · see it in the full Act
class

“class”, in relation to shares or securities, means a class of shares or securities of any one company;

Defined in s.288(1) · see it in the full Act
the relevant time

(2) In this paragraph “the relevant time”, in relation to a group of companies, and in relation to each of the elections referred to in paragraph 4(8) above, is the first occasion after 19th March 1968 when any company which is then a member of a group disposes of quoted securities of a kind covered by that election, and for the purposes of paragraph 4(11) above that occasion is, in relation to the group, “the first relevant disposal".

Defined in Sch.2 para.5(2) · see it in the full Act

10 (1) For the purposes of this Part of this Schedule, the current use value of an interest in land shall be ascertained in accordance with the following provisions of this Part, and in this Part the time as at which current use value is to be ascertained is referred to as “the relevant time”.

Defined in Sch.2 para.10(1) · see it in the full Act

(b) but for this paragraph, the election would, as a result of paragraph 20, have ceased to have effect from a particular time for all purposes of this Part of this Schedule (“the relevant time”),

Defined in Sch.5AAA para.28(1) · see it in the full Act

(b) but for this paragraph, the election would, as a result of paragraph 20, have ceased to have effect from a particular time (“the relevant time”) for all purposes of this Part of this Schedule, and

Defined in Sch.5AAA para.30(1) · see it in the full Act
relevant time

and, in the case of a transfer of property from Settlement 1 to Settlement 2 in relation to which section 68B applies, “relevant time” in relation to a settlor of the transferred property in respect of Settlement 2 includes any time which, immediately before the time of the disposal by the trustees of Settlement 1, was a relevant time in relation to that settlor in respect of Settlement 1.

Defined in s.69(2C) · see it in the full Act
freehold

(4) In the application of this paragraph to Scotland, “freehold” means the estate or interest of the proprietor of the dominium utile or, in the case of property other than feudal property, of the owner, and “reversion” means the interest of the landlord in property subject to a lease.

Defined in Sch.2 para.11(4) · see it in the full Act
lessee

and “lessor”, “lessee” and “rent” shall be construed accordingly.

Defined in Sch.8 para.10(1) · see it in the full Act
reversion

(4) In the application of this paragraph to Scotland, “freehold” means the estate or interest of the proprietor of the dominium utile or, in the case of property other than feudal property, of the owner, and “reversion” means the interest of the landlord in property subject to a lease.

Defined in Sch.2 para.11(4) · see it in the full Act

Cases considering section 179 3

Johnston Publishing (North) Ltd v Revenue and Customs

[2008] EWCA Civ 858 · 23 July 2008Interprets

Interprets the statutory scheme as combining an exit charge with a limited exemption for specified acquisitions between associated companies. (see paras [5]-[8]; [24]-[31]) Applies the degrouping provisions to assets acquired from a group company within six years before the chargeable company leaves the group. The provision identifies the starting point for the exit-charge analysis. (see paras [5]-[7]; [25]; [28]) Defines associated companies by reference to whether, taken by themselves, they would form a group of companies. That definition identifies the relevant sub-group for the section 179 exemption. (see paras [5]; [8]; [24]-[25]) Defines the associated-company sub-group by asking whether the companies, taken together and by themselves, would form a group. The majority used that concept to confine the exemption to an existing sub-group. (see paras [14]; [24]-[25]; [29]) Interprets the second limb of the exemption as requiring the transferor and transferee to have been associated companies at the time of acquisition, in addition to being associated when they left the group. The exemption was therefore unavailable where association arose only after the transfer. (see paras [15]-[16]; [22]-[31]; [45]-[50]) The majority uses the parenthetical description in this provision as an example of the drafting technique used to identify a company or group for later reference. (see para [22]) The majority uses the parenthetical description in this provision as an example of the drafting technique used to identify a company or group for later reference. (see para [22]) Applies the exit charge by treating the chargeable company as having disposed of and reacquired the asset at market value when the relevant company leaves the group. The provision counteracts deferral of tax on an intra-group transfer. (see paras [5]-[6]; [13]-[14]; [28]-[30])

DMWSHNZ Ltd v HM Revenue and Customs

[2015] EWCA Civ 1036 · 20 October 2015

Cited as an example of a deemed market-value disposal and reacquisition when a company leaves a group. (see para [11])

HM Revenue & Customs v Prizedome Ltd & Anor

[2008] EWHC 19 (Ch) · 18 January 2008

Applied on the respondents’ leaving the Anglo group so that their shareholdings were deemed to be disposed of at market value. The resulting losses were treated as pre-entry losses for the GL group. (see paras [5], [24]) Identified the losses arising from the deemed disposals under section 179. Those losses were the losses whose treatment under Schedule 7A was in issue. (see paras [5], [24])

What each judgment says about section 179 is in the case-law panel in the full Act.

Amendments and notes

63 notes from legislation.gov.uk

Amendments

  1. F1348S. 179(1)(1A) substituted for s. 179(1) (with effect in accordance with Sch. 29 para. 4(6) of the amending Act) by Finance Act 2000 (c. 17), Sch. 29 para. 4(2) (with Sch. 29 para. 46(5))
  2. F1349Words in s. 179(1)(a) substituted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(2)
  3. F1350Words in s. 179(1A) omitted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 10 para. 3(3)
  4. F1351S. 179(1AA) inserted (with effect in accordance with reg. 3(1) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 1 para. 9 (with S.I. 2008/1579, reg. 4(1) (with S.I. 2008/1579, reg. 4(1)))
  5. F1352S. 179(1B)-(1D) substituted for s. 179(1B)(1C) (with effect in accordance with reg. 3(2) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 2 para. 7 (with S.I. 2008/1579, reg. 4(1))
  6. F1353S. 179(2)-(2ZB) substituted for s. 179(2) (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(4)
  7. F1354S. 179(2A)(2B) inserted (with effect in accordance with s. 49(3) of the amending Act) by Finance Act 1995 (c. 4), s. 49(1)
  8. F1355Words in s. 179(2A) substituted (with effect in accordance with s. 31(5) of the amending Act) by Finance Act 2011 (c. 11), s. 31(2)(a)
  9. F1356S. 179(2A)(a)(aa) substituted for s. 179(2A)(a) (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(5)
  10. F1357Words in s. 179(2A)(b) substituted (with effect in accordance with Sch. 29 para. 4(6) of the amending Act) by Finance Act 2000 (c. 17), Sch. 29 para. 4(3)(b) (with Sch. 29 para. 46(5))
  11. F1358S. 179(2A)(c)(d) substituted (with effect in accordance with s. 31(5) of the amending Act) by Finance Act 2011 (c. 11), s. 31(2)(b)
  12. F1359S. 179(2AA)(2AB) inserted (with effect in accordance with s. 31(5) of the amending Act) by Finance Act 2011 (c. 11), s. 31(3)
  13. F1360Words in s. 179(2B) substituted (with effect in accordance with s. 31(5) of the amending Act) by Finance Act 2011 (c. 11), s. 31(4)
  14. F1361Words in s. 179(2B)-(3) substituted (with effect in accordance with Sch. 29 para. 4(6) of the amending Act) by Finance Act 2000 (c. 17), Sch. 29 para. 4(4) (with Sch. 29 para. 46(5))
  15. F1362Words in s. 179(2B)(b) substituted (with effect in accordance with s. 139(2) of the amending Act) by Finance Act 1998 (c. 36), s. 139(1)(a)
  16. F1363Words in s. 179(2B)(c) substituted (with effect in accordance with s. 139(2) of the amending Act) by Finance Act 1998 (c. 36), s. 139(1)(b)
  17. F1364Words in s. 179(2B)(c) substituted (with effect in accordance with s. 139(2) of the amending Act) by Finance Act 1998 (c. 36), s. 139(1)(c)
  18. F1365S. 179(2C) inserted (with application in accordance with s. 133(3) of the amending Act) by Finance Act 1998 (c. 36), s. 133(2)
  19. F1366S. 179(2D) inserted (with application in accordance with s. 135(5) of the amending Act) by Finance Act 1998 (c. 36), s. 135(3)
  20. F1367S. 179(3A)-(3H) inserted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(6)
  21. F1368Words in s. 179(3B)(c) substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 65(2)
  22. F1369Word in s. 179(4) substituted (with effect in accordance with s. 44(3)(5) of the amending Act) by Finance Act 2002 (c. 23), Sch. 8 para. 2
  23. F1370Words in s. 179(4) substituted (with effect in accordance with Sch. 29 para. 4(6) of the amending Act) by Finance Act 2000 (c. 17), Sch. 29 para. 4(4) (with Sch. 29 para. 46(5))
  24. F1371Words in s. 179(4) substituted (27.7.1993 with effect as mentioned in s. 89(2)) by 1993 c. 34, s. 89(1)(2)
  25. F1372Words in s. 179(4) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 244(2) (with Sch. 2)
  26. F1373S. 179(5) substituted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(7)
  27. F1374Words in s. 179(6) substituted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(8)(a)
  28. F1375Words in s. 179(6) substituted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(8)(b)
  29. F1376Words in s. 179(7) substituted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(9)
  30. F1377S. 179(7A)(7B) inserted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(10)
  31. F1378Words in s. 179(8) substituted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(11)
  32. F1379Words in s. 179(9)(b) inserted (with effect in accordance with Sch. 9 para. 6 of the amending Act) by Finance Act 2011 (c. 11), Sch. 9 para. 4
  33. F1380S. 179(9A) inserted (with effect in accordance with s. 49(3) of the amending Act) by Finance Act 1995 (c. 4), s. 49(2)
  34. F1381Words in s. 179(9A) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 244(3)(a) (with Sch. 2)
  35. F1382Words in s. 179(9A) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 244(3)(b) (with Sch. 2)
  36. F1383Words in s. 179(9A) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 244(3)(c) (with Sch. 2)
  37. F1384S. 179(10)(a) substituted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(12)
  38. F1385Words in s. 179(10)(c) substituted (with effect in accordance with Sch. 29 para. 4(6) of the amending Act) by Finance Act 2000 (c. 17), Sch. 29 para. 4(4) (with Sch. 29 para. 46(5))
  39. F1386S. 179(10A) inserted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 10 para. 3(13)
  40. F1387Words in s. 179(10A)(a) substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 65(3)
  41. F1388S. 179(11)(12) repealed (with effect in accordance with Sch. 29 para. 4(7), Sch. 40 Pt. II(12) Note 8 of the amending Act) by Finance Act 2000 (c. 17), Sch. 29 para. 4(5), Sch. 40 Pt. II(12) (with Sch. 29 para. 46(5))
  42. F1389Words in s. 179(13) substituted (with effect in accordance with Sch. 29 para. 4(6) of the amending Act) by Finance Act 2000 (c. 17), Sch. 29 para. 4(4) (with Sch. 29 para. 46(5))

Modifications

  1. C304Ss. 170-192 restricted (27.7.1999) by Commonwealth Development Corporation Act 1999 (c. 20), Sch. 3 paras. 1, 4(1)
  2. C305Ss. 170-181 restricted (12.1.2000) by Greater London Authority Act 1999 (c. 29), ss. 419(3), 425(2); S.I. 1999/3434, art. 2
  3. C308Ss. 170-181 modified (5.10.2004) by Energy Act 2004 (c. 20), s. 198(2), Sch. 9 para. 35(a) (with s. 38(2)); S.I. 2004/2575, art. 2(1), Sch. 1
  4. C343S. 179 excluded (27.7.1993) by 1993 c. 37, s. 12, Sch. 2 Pt. I para. 4(1)
  5. C344S. 179 modified (retrospective to 11.1.1994) by Finance Act 1994 (c. 9), s. 252(3), Sch. 24 para. 8(1)-(3)
  6. C345S. 179 applied (retrospective to 11.1.1994) by Finance Act 1994 (c. 9), s. 252(3), Sch. 24 para. 8(5)
  7. C346S. 179 restricted (3.5.1994) by Finance Act 1994 (c. 9), s. 250(2)
  8. C347S. 179 modified (19.9.1994) by Coal industry Act 1994 (c. 21), s. 68(4), Sch. 4 para. 8(1)(2) (with Sch. 4 paras. 8(3), 14); S.I. 1994/2189, art. 2, Sch.
  9. C348S. 179 applied (19.9.1994) by Coal industry Act 1994 (c. 21), s. 68(4), Sch. 4 para. 8(4) (with Sch. 4 para. 14); S.I. 1994/2189, art. 2, Sch.
  10. C349S. 179 modified (8.11.1995) by Atomic Energy Authority Act 1995 (c. 37), Sch. 3 para. 5(1)(2) (with Sch. 3 para. 5(4))
  11. C350S. 179 modified (24.7.1996) by Broadcasting Act 1996 (c. 55), s. 149(1), Sch. 7 para. 6 (with Sch. 7 para. 9(1))
  12. C351S. 179 excluded (27.7.1999) by Commonwealth Development Corporation Act 1999 (c. 20), Sch. 3 paras. 1, 3(4), 4(2)
  13. C352S. 179 modified (12.1.2000) by Greater London Authority Act 1999 (c. 29), s. 425(2), Sch. 33 paras. 3, 9; S.I. 1999/3434, art. 2
  14. C353S. 179 modified (1.2.2001) by Transport Act 2000 (c. 38), s. 275(1), Sch. 7 paras. 8-10; S.I. 2001/57, art. 3(1)
  15. C354S. 179 modified (15.1.2001) by Transport Act 2000 (c. 38), s. 275(1), Sch. 26 paras. 11, 20, 25, 32; S.I. 2000/3376, art. 2
  16. C355S. 179 modified (5.10.2004) by Energy Act 2004 (c. 20), s. 198(2), Sch. 9 paras. 5, 19 (with s. 38(2)); S.I. 2004/2575, art. 2(1), Sch. 1
  17. C356S. 179 modified (E.W.S.) (24.7.2005) by Railways Act 2005 (c. 14), s. 60(2), Sch. 10 para. 26; S.I. 2005/1909, art. 2, Sch.
  18. C357S. 179 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 31
  19. C358S. 179 excluded (with effect in accordance with reg. 1(2) of the affecting S.I.) by The Mutual Societies (Transfers of Business) (Tax) Regulations 2009 (S.I. 2009/2971), regs. 1(1), 17, 18(3)
  20. C359S. 179 modified (with effect in accordance with reg. 1(2) of the affecting S.I.) by The Mutual Societies (Transfers of Business) (Tax) Regulations 2009 (S.I. 2009/2971), regs. 1(1), 18(4)

Commencement

  1. I4s. 179: 30.9.1993 appointed for the purposes of s. 179 by S.I. 1992/3066, art. 2(2)(d)