Taxation of Chargeable Gains Act 1992

• (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.

• (4) Any chargeable gain or allowable loss accruing to company A on the sale referred to in subsection (3) above shall be treated as accruing to company A 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;

and sections 138 to 142 of CTA 2010 have effect accordingly as if the actual circumstances were as they are treated as having been.

• (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.

• (6) Subsection (3) does not apply to treat company A as selling the asset at that time; but if—

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

• (b) at the relevant time, company A, 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,

company A 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 company A is a 75 per cent. subsidiary of one or more members of the other group referred to in subsection (5) above, and

• (b) that company A is an effective 51 per cent. subsidiary of one or more of those members.

• (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).

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

• (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 or 31, 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.

• (9A) Sections 450 and 451 of CTA 2010 (meaning of control) shall have effect for the purposes of subsection (2B) above as they have effect for the purposes of Part 10 of CTA 2010; 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.

• (10) For the purposes of this section—

• (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 company,

• (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 company A 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.

• (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 chargeable to corporation tax as a result of section 2B(3) or (4), or

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

• (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (13) Where under this section company A 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.

Claim for adjustment of calculations under section 179

179ZA

• (1) This section applies where—

• (a) a gain accrues to a company (“company A”) on a sale referred to in subsection (3) or (6) of section 179, or

• (b) a gain would so accrue but for subsection (3A) or (7A) of that section.

• (2) If subsection (3D) or (3E) of that section applies in relation to one or more group disposals (within the meaning of that section)—

• (a) the company making the disposal, or

• (b) if there is more than one disposal, the companies making those disposals acting jointly,

may make a claim for the amount of the gain to be treated for the purposes of the subsection in question as reduced by an amount specified in the claim.

• (3) In any other case, company A may make a claim for the amount of the gain to be treated for all purposes of this Act as reduced by an amount specified in the claim.

• (4) Where a claim is made under subsection (2) or (3), the gain must be treated, for the purposes mentioned in the subsection in question, as reduced by such amount (if any) as is just and reasonable.

• (5) In determining the amount which is just and reasonable regard must be had, in particular, to any transaction as a direct or indirect result of which company A or any associated company (within the meaning of section 179(10)) acquired the asset to which the gain relates.

• (6) Where under this section the gain accruing to company A on a sale referred to in subsection (3) or (6) of section 179 is treated as reduced by an amount (“the permitted deduction”), the subsection in question has effect, so far as it provides for the immediate reacquisition of the asset by company A, as if the reference to market value of the asset were to its market value less the permitted deduction.

Reallocation within group of gain or loss accruing under section 179

179A

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Roll-over of degrouping charge on business assets

179B

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Transitional provisions.

180

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Exemption from charge under 178 or 179 in the case of certain mergers.

181

• (1) Subject to the following provisions of this section, section 179 shall not apply in a case where—

• (a) as part of a merger, a company (“company A”) ceases to be a member of a group of companies (“the A group”); and

• (b) ... the merger was carried out for bona fide commercial reasons and ... the avoidance of liability to tax was not the main or one of the main purposes of the merger.

• (2) In this section “merger” means an arrangement (which in this section includes a series of arrangements)—

• (a) whereby one or more companies (“the acquiring company” or, as the case may be, “the acquiring companies”) none of which is a member of the A group acquires or acquire, otherwise than with a view to their disposal, one or more interests in the whole or part of the business which, before the arrangement took effect, was carried on by company A; and

• (b) whereby one or more members of the A group acquires or acquire, otherwise than with a view to their disposal, one or more interests in the whole or part of the business or each of the businesses which, before the arrangement took effect, was carried on either by the acquiring company or acquiring companies or by a company at least 90 per cent. of the ordinary share capital of which was then beneficially owned by 2 or more of the acquiring companies; and

• (c) in respect of which the conditions in subsection (4) below are fulfilled.

• (3) For the purposes of subsection (2) above, a member of a group of companies shall be treated as carrying on as one business the activities of that group.

• (4) The conditions referred to in subsection (2)(c) above are—

• (a) that not less than 25 per cent. by value of each of the interests acquired as mentioned in paragraphs (a) and (b) of subsection (2) above consists of a holding of ordinary share capital, and the remainder of the interest, or as the case may be of each of the interests, acquired as mentioned in subsection (2)(b), consists of a holding of share capital (of any description) or debentures or both; and

• (b) that the value or, as the case may be, the aggregate value of the interest or interests acquired as mentioned in subsection (2)(a) above is substantially the same as the value or, as the case may be, the aggregate value of the interest or interests acquired as mentioned in subsection (2)(b) above; and

• (c) that the consideration for the acquisition of the interest or interests acquired by the acquiring company or acquiring companies as mentioned in subsection (2)(a) above, disregarding any part of that consideration which is small by comparison with the total, either consists of, or is applied in the acquisition of, or consists partly of and as to the balance is applied in the acquisition of, the interest or interests acquired by members of the A group as mentioned in subsection (2)(b) above;

and for the purposes of this subsection the value of an interest shall be determined as at the date of its acquisition.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction on indexation allowance for groups and associated companies

Disposals of debts.

182

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Disposals of shares.

183

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Definitions and other provisions supplemental to sections 182 and 183.

184

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Restrictions on buying losses or gains etc

Restrictions on buying losses: tax avoidance schemes

184A

• (1) This section applies for the purposes of corporation tax in respect of chargeable gains if—

• (a) at any time (“the relevant time”) there is a qualifying change of ownership in relation to a company (“the relevant company”) (see section 184C),

• (b) a loss (a “qualifying loss”) accrues to the relevant company or any other company on a disposal of a pre-change asset (see subsection (3)),

• (c) the change of ownership occurs directly or indirectly in consequence of, or otherwise in connection with, any arrangements the main purpose, or one of the main purposes, of which is to secure a tax advantage (see section 184D), and

• (d) the advantage involves the deduction of a qualifying loss from any chargeable gains (whether or not it also involves anything else).

• (2) A qualifying loss accruing to a company is not to be deductible from chargeable gains accruing to the company ... .

• (3) In this section a “pre-change asset” means an asset which was held by the relevant company before the relevant time (but see also sections 184E and 184F).

• (4) In this section “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

• (5) For the purposes of this section it does not matter—

• (a) whether a qualifying loss accrues before, after or at the relevant time,

• (b) whether a qualifying loss accrues at a time when there are no chargeable gains from which it could be deducted (or could otherwise have been deducted), or

• (c) whether the tax advantage is secured for the company to which a qualifying loss accrues or for any other company.

Restrictions on buying gains: tax avoidance schemes

184B

• (1) This section applies for the purposes of corporation tax in respect of chargeable gains if—

• (a) at any time (“the relevant time”) there is a qualifying change of ownership in relation to a company (“the relevant company”) (see section 184C),

• (b) a gain (a “qualifying gain”) accrues to the relevant company or any other company on a disposal of a pre-change asset (see subsection (3)),

• (c) the change of ownership occurs directly or indirectly in consequence of, or otherwise in connection with, any arrangements the main purpose, or one of the main purposes, of which is to secure a tax advantage, and

• (d) the advantage involves the deduction of a loss from a qualifying gain (whether or not it also involves anything else).

• (2) In the case of a qualifying gain accruing to a company, a loss accruing to the company is not to be deductible from the gain ... .

• (3) In this section a “pre-change asset” means an asset which was held by the relevant company before the relevant time (but see also sections 184E and 184F).

• (4) In this section “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

• (5) For the purposes of this section it does not matter—

• (a) whether a qualifying gain accrues before, after or at the relevant time,

• (b) whether a qualifying gain accrues at a time when there are no losses which could be deducted (or could otherwise have been deducted) from the gain, or

• (c) whether the tax advantage is secured for the company to which a qualifying gain accrues or for any other company.

Sections 184A and 184B: meaning of “qualifying change of ownership”

184C

• (1) For the purposes of sections 184A and 184B, there is a qualifying change of ownership in relation to a company at any time if any one or more of the following occur at that time—

• (a) the company joins a group of companies (see subsections (2) to (5)),

• (b) the company ceases to be a member of a group of companies,

• (c) the company becomes subject to different control (see subsections (6) to (9)).

• (2) Whether a company is a member of a group of companies at any time is determined in accordance with section 170.

• (3) But, apart from in the excepted case, nothing in section 170(10) or (10A) is to prevent all the companies of one group from being regarded as joining another group when the principal company of the first group becomes a member of the other group at any time.

• (4) The excepted case is the case where—

• (a) the persons owning the shares of the principal company of the first group immediately before that time are the same as the persons owning the shares of the principal company of the other group immediately after that time,

• (b) the principal company of the other group was not the principal company of any group immediately before that time, and

• (c) immediately after that time the principal company of the other group had assets consisting entirely (or almost entirely) of shares of the principal company of the first group.

• (5) For this purpose, references to shares of a company are to the shares comprised in the issued share capital of the company.

• (6) The general rule is that a company becomes subject to different control at any time if any one or more of the following occur—

• (a) a person has control of the company at that time (whether alone or together with one or more others) and the person did not previously have control of the company,

• (b) a person has control of the company at that time together with one or more others and the person previously had control of the company alone,

• (c) a person ceases to have control of the company at that time (whether the person had control alone or together with one or more others).

• (7) The general rule is subject to the following exceptions.

• (8) A company does not become subject to different control in any case where it joins a group of companies and the case is the excepted case mentioned above.

• (9) A company (“the subsidiary”) does not become subject to different control at any time in any case where—

• (a) immediately before that time the subsidiary is the 75 per cent. subsidiary of another company, and

• (b) (although there is a change in the direct ownership of the subsidiary) that other company continues immediately after that time to own it as a 75 per cent. subsidiary.

Sections 184A and 184B: meaning of “tax advantage”

184D

For the purposes of sections 184A and 184B, “tax advantage” means—

• (a) relief or increased relief from corporation tax,

• (b) repayment or increased repayment of corporation tax,

• (c) the avoidance or reduction of a charge to corporation tax or an assessment to corporation tax, or

• (d) the avoidance of a possible assessment to corporation tax.

Sections 184A and 184B: “pre-change assets”: basic rules

184E

• (1) If—

• (a) a company other than the relevant company makes a disposal of an asset, and

• (b) the asset has been disposed of at any time after the relevant time by a disposal to which section 171(1) does not apply (a “non-section 171(1) transfer”),

the asset ceases to be regarded as a pre-change asset for the purposes of sections 184A and 184B (but see also subsections (10) and (11)).

• (2) But (without affecting the generality of the provision made by the following subsection) if, on a non-section 171(1) transfer,—

• (a) an asset would cease to be regarded as a pre-change asset as a result of subsection (1), and

• (b) the company making the non-section 171(1) transfer retains any interest in or over the asset,

that interest is to be regarded as a pre-change asset for the purposes of sections 184A and 184B.

• (3) If—

• (a) the relevant company or any other company holds an asset (“the new asset”) at or after the relevant time,

• (b) the value of the new asset derives in whole or in part from a pre-change asset, and

• (c) the new asset is not acquired by the company concerned as a result of a non-section 171(1) transfer,

the new asset is also to be regarded as a pre-change asset for the purposes of sections 184A and 184B.

• (4) For this purpose the cases in which the value of an asset may be derived from any other asset include any case where—

• (a) assets have been merged or divided,

• (b) assets have changed their nature, or

• (c) rights or interests in or over assets have been created or extinguished.

• (5) If a pre-change asset is “the old asset” for the purposes of section 116 (reorganisations, conversions and reconstructions), “the new asset” for the purposes of that section is also to be regarded as a pre-change asset for the purposes of sections 184A and 184B.

• (6) If a pre-change asset is the “original shares” for the purposes of sections 127 to 131 (reorganisation or reduction of share capital), the “new holding” for the purposes of those sections is also to be regarded as a pre-change asset for the purposes of sections 184A and 184B.

• (7) The following subsection applies if, as a result of the application of a relevant deferral provision in the case of a disposal of a pre-change asset (“the original disposal”),—

• (a) a gain or loss that would otherwise accrue to a company does not so accrue, or

• (b) any part of any such gain is treated as forming part of a single chargeable gain which does not accrue to the company on the original disposal,

and a gain or loss does, wholly or partly in consequence of the application of that provision in the case of the original disposal, accrue to the company or any other company on a subsequent occasion.

• (8) So much of the gain or loss accruing on the subsequent occasion as accrues in consequence of the application of the relevant deferral provision in the case of the original disposal is to be regarded for the purposes of sections 184A and 184B as accruing on a disposal of a pre-change asset (so far as it would not otherwise be so regarded).

• (9) A “relevant deferral provision” means any of the following—

• (a) section 139 (reconstruction involving transfer of business),

• (b) section 140 (postponement of charge on transfer of assets to non-resident company),

• (c) section 140A (transfer of a UK trade),

• (d) section 140E (merger leaving assets within UK tax charge),

• (e) sections 152 and 153 (replacement of business assets),

• (f) section 187 (postponement of charge on deemed disposal under section 185).

• (10) If—

• (a) a pre-change asset of the relevant company is transferred to another company (“the transferee company”),

• (b) any of sections 139, 140A and 140E apply to the companies in the case of the asset, and

• (c) the transfer of the asset is made directly or indirectly in consequence of, or otherwise in connection with, the arrangements mentioned in section 184A or 184B,

the asset is to be regarded as a “pre-change asset” in the hands of the transferee company for the purposes of sections 184A and 184B.

• (11) In such a case, subsection (1) applies as if the reference in paragraph (a) of that subsection to the relevant company were to the transferee company.

Sections 184A and 184B: “pre-change assets”: pooling rules

184F

• (1) This section applies, in the case of any pre-change asset of the relevant company or any pre-change asset of any company which is acquired on a disposal to which section 171(1) applies, if—

• (a) the pre-change asset consists of a holding of securities which falls as a result of any provision of Chapter 1 of Part 4 to be regarded as a single asset (“the pre-change pooled asset”), and

• (b) as a result of any disposal or acquisition at any time after the relevant time, any securities (“the other securities”) would (but for this section) be regarded as forming part of the pre-change pooled asset.

• (2) None of the other securities are to be regarded for the purposes of this Act as forming part of the pre-change pooled asset.

• (3) But this does not prevent the other securities from being regarded, as a result of any provision of that Chapter, as forming part of or constituting a different, single asset (“the other pooled asset”).

• (4) Securities of the same class as the other securities which are disposed of at or after the relevant time—

• (a) are to be identified first with the other securities or securities forming part of the other pooled asset,

• (b) are to be identified next with securities forming part of the pre-change pooled asset (if the number of securities disposed of exceeds the number identified in accordance with paragraph (a)), and

• (c) subject to paragraphs (a) and (b), are to be identified in accordance with the provisions applicable apart from those paragraphs.

• (5) The above identification rules apply even if some or all of the securities disposed of are otherwise identified—

• (a) by the disposal, or

• (b) by a transfer or delivery giving effect to it;

but where a company disposes of securities in one capacity, they are not to be identified with securities which it holds, or can dispose of, only in some other capacity.

• (6) Chapter 1 of Part 4 has effect subject to this section.

• (7) In this section—

• “pre-change asset” means an asset which is pre-change asset for the purposes of section 184A or 184B,

• “securities” does not include relevant securities as defined in section 108 but, subject to that, means—shares or securities of a company, andany other assets where they are of a nature to be dealt in without identifying the particular assets disposed of or acquired.

• (8) For the purposes of this section, shares or securities of a company are not to be treated as being of the same class unless—

• (a) they are so treated by the practice of a recognised stock exchange, or

• (b) they would be so treated if dealt with on a recognised stock exchange.

Avoidance involving losses: schemes converting income to capital

184G

• (1) This section applies for the purposes of corporation tax in respect of chargeable gains if conditions A to D are satisfied.

• (2) Condition A is that a receipt or other amount arises to a company directly or indirectly in consequence of, or otherwise in connection with, any arrangements.

• (3) Condition B is that—

• (a) that amount falls to be taken into account in calculating a chargeable gain (the “relevant gain”) which accrues to a company (“the relevant company”), and

• (b) losses accrue (or have accrued) to the relevant company (whether before or after or as part of the arrangements).

• (4) Condition C is that, but for the arrangements, an amount would have fallen to be taken into account wholly or partly instead of the amount mentioned in subsection (2) in calculating the income chargeable to corporation tax—

• (a) of the relevant company, or

• (b) of a company which, at any qualifying time, is a member of the same group as the relevant company.

• (5) Condition D is that—

• (a) the main purpose of the arrangements, or

• (b) one of the main purposes of the arrangements,

is to secure a tax advantage that involves the deduction of any of the losses from the relevant gain (whether or not it also involves anything else).

• (6) If the Board consider, on reasonable grounds, that conditions A to D are or may be satisfied, they may give the relevant company a notice in respect of the arrangements (but see also section 184I).

• (7) If, when the notice is given, conditions A to D are satisfied, no loss accruing to the relevant company at any time is to be deductible from the relevant gain.

• (8) A notice under this section must—

• (a) specify the arrangements,

• (b) specify the accounting period in which the relevant gain accrues, and

• (c) inform the relevant company of the effect of this section.

• (9) If relevant gains accrue in more than one accounting period, a single notice under this section may specify all the accounting periods concerned.

• (10) In this section—

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

• “group”, in relation to companies, means a group determined in accordance with section 170,

• “qualifying time”, in relation to any arrangements, means any time which falls in the period—beginning with the time at which the arrangements are made, andending with the time at which the matters (other than any tax advantage) intended to be secured by the arrangements are secured,

• “tax advantage” has the meaning given by section 184D.

Avoidance involving losses: schemes securing deductions

184H

• (1) This section applies for the purposes of corporation tax in respect of chargeable gains if conditions A to D are satisfied.

• (2) Condition A is that—

• (a) a chargeable gain (the “relevant gain”) accrues to a company (“the relevant company”) directly or indirectly in consequence of, or otherwise in connection with, any arrangements, and

• (b) losses accrue (or have accrued) to the relevant company ... (whether before or after or as part of the arrangements).

• (3) Condition B is that the relevant company, or a company connected with the relevant company, becomes entitled to an income deduction directly or indirectly in consequence of, or otherwise in connection with, the arrangements.

• (4) Condition C is that the main purpose, or one of the main purposes, of the arrangements is to secure a tax advantage that involves both—

• (a) that income deduction, and

• (b) the deduction of any of the losses from the relevant gain,

whether or not it also involves anything else.

• (5) Condition D is that the arrangements are not excluded arrangements. For this purpose arrangements are excluded arrangements if—

• (a) the arrangements are made in respect of land or any estate or interest in land,

• (b) the arrangements fall within section 835(1) or 836(1) of CTA 2010 (sale and lease-back: limitation on tax reliefs),

• (c) the person to whom the payment mentioned in that subsection is payable is not a company connected with the relevant company, and

• (d) the arrangements are made between persons dealing at arm's length.

• (6) If the Board consider, on reasonable grounds, that conditions A to D are or may be satisfied, they may give the company a notice in respect of the arrangements (but see also section 184I).

• (7) If, when the notice is given, conditions A to D are satisfied, no loss accruing to the company at any time is to be deductible from the relevant gain.

• (8) A notice under this section must—

• (a) specify the arrangements,

• (b) specify the accounting period in which the relevant gain accrues, and

• (c) inform the relevant company of the effect of this section.

• (9) If relevant gains accrue in more than one accounting period, a single notice under this section may specify all the accounting periods concerned.

• (10) In this section—

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

• “income deduction” means— a deduction in calculating income for corporation tax purposes, ora deduction from total profits,

• “tax advantage” has the meaning given by section 184D.

• (11) For the purposes of this section it does not matter whether the tax advantage is secured for the relevant company or for any other company.

Notices under sections 184G and 184H

184I

• (1) Subsection (2) applies if—

• (a) the Board give a notice under section 184G or 184H (a “relevant notice”) to a company that specifies an accounting period, and

• (b) the notice is given before the company has made its company tax return for that accounting period.

• (2) If the company makes its return for that period before the end of the applicable 90 day period (see subsection (12)), it may—

• (a) make a return that disregards the notice, and

• (b) at any time after making the return and before the end of the applicable 90 day period, amend the return for the purpose of complying with the provision referred to in the notice.

• (3) If a company has made a company tax return for an accounting period, the Board may give the company a relevant notice in relation to that period only if a notice of enquiry has been given to the company in respect of its return for that period.

• (4) After any enquiries into the return for that period have been completed in relation to any matters, the Board may give the company a relevant notice relating to those matters only if requirements A and B are met.

• (5) Requirement A is that at the time the enquiries referred to in subsection (4) were completed, the Board could not have been reasonably expected, on the basis of information made available—

• (a) to them before that time, or

• (b) to an officer of theirs before that time,

to have been aware that the circumstances were such that a relevant notice could have been given to the company in relation to that period.

• (6) For the purposes of requirement A, paragraph 44(2) and (3) of Schedule 18 to the Finance Act 1998 (information made available) applies as it applies for the purposes of paragraph 44(1).

• (7) Requirement B is that—

• (a) the company or any other person was requested to produce or provide information during an enquiry into the return for that period (so far as relating to the matters in question), and

• (b) if the request had been duly complied with, the Board could reasonably have been expected to give the company a relevant notice in relation to that period.

• (8) If—

• (a) a company makes a company tax return for an accounting period, and

• (b) the company is subsequently given a relevant notice that specifies that period,

it may amend the return for the purpose of complying with the provision referred to in the notice at any time before the end of the applicable 90 day period.

• (9) If the relevant notice is given to the company after it has been given a notice of enquiry in respect of its return for the period, no closure notice may be given in relation to its company tax return until—

• (a) the end of the applicable 90 day period, or

• (b) the earlier amendment of its company tax return for the purpose of complying with the provision referred to in the notice.

• (9A) Subsection (9) does not apply to a partial closure notice which does not relate to any matter to which the relevant notice relates.

• (10) If the relevant notice is given to the company after any enquiries into the return for the period are completed, so far as relating to the matters to which the relevant notice relates, no discovery assessment may be made as regards the chargeable gain to which the notice relates until—

• (a) the end of the applicable 90 day period, or

• (b) the earlier amendment of the company tax return for the purpose of complying with the provision referred to in the notice.

• (11) Subsections (2)(b) and (8) do not prevent a company tax return for a period becoming incorrect if—

• (a) a relevant notice is given to the company in relation to that period,

• (b) the return is not amended in accordance with subsection (2)(b) or (8) for the purpose of complying with the provision referred to in the notice, and

• (c) the return ought to have been so amended.

• (12) In this section—

• “the applicable 90 day period”, in relation to a relevant notice, means the period of 90 days beginning with the day on which the notice is given,

• “closure notice” means a notice under paragraph 32 of Schedule 18 to the Finance Act 1998,

• “company tax return” means the return required to be delivered pursuant to a notice under paragraph 3 of that Schedule, as read with paragraph 4 of that Schedule,

• “discovery assessment” means an assessment under paragraph 41 of that Schedule,

• “notice of enquiry” means a notice under paragraph 24 of that Schedule.

Assets subject to EU exit charges

Asset subject to EU exit charge on becoming chargeable asset

184J

• (1) This section applies if—

• (a) an asset becomes a chargeable asset in relation to a company by reason of an event specified in subsection (2), and

• (b) on the occurrence of that event the company becomes subject to an EU exit charge in relation to the asset.

• (2) The events are—

• (a) the company becoming resident in the United Kingdom, and

• (b) in the case of a company that is not resident in the United Kingdom, the asset beginning to be held for the purposes of a trade carried on by the company in the United Kingdom through a permanent establishment.

• (3) The company is to be treated for the purposes of this Act as if it had acquired the asset for its market value at the time it became a chargeable asset in relation to the company.

• (4) For the purposes of this section an asset is a “chargeable asset” in relation to a company at any time if any gain on its disposal by the company at that time would be chargeable to corporation tax.

• (5) “EU exit charge” means a charge to tax under the law of a member State in accordance with Article 5(1) of Directive (EU) 2016/1164 of the European Parliament and of the Council of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market.

Non-resident and dual resident companies

Deemed disposal of assets on company ceasing to be resident in U.K.

185

• (1) This section applies to a company if, at any time (“the relevant time”), the company ceases to be resident in the United Kingdom.

• (2) The company shall be deemed for all purposes of this Act—

• (a) to have disposed of all its assets, other than assets excepted from this subsection by subsection (4) below, immediately before the relevant time; and

• (b) immediately to have reacquired them,

at their market value at that time.

• (3) Section 152 shall not apply where the company—

• (a) has disposed of the old assets, or of its interest in those assets, before the relevant time; and

• (b) acquires the new assets, or its interest in those assets, after that time,

unless the new assets are excepted from this subsection by subsection (4) below.

• (4) If at any time after the relevant time the company carries on a trade in the United Kingdom through a permanent establishment—

• (a) any assets which, immediately after the relevant time, are situated in the United Kingdom and are used in or for the purposes of the trade, or are used or held for the purposes of the permanent establishment, shall be excepted from subsection (2) above; and

• (b) any new assets which, after that time, are so situated and are so used or so held shall be excepted from subsection (3) above;

and references in this subsection to assets situated in the United Kingdom include references to exploration or exploitation assets and to exploration or exploitation rights.

• (4A) Subsection (4) applies to an overseas life insurance company in the case of its long-term business with—

• (a) the omission from paragraph (a) of the words “are situated in the United Kingdom and”; and

• (b) the omission from paragraph (b) of the words “are so situated and”.

• (5) In this section—

• (a) “designated area”, “exploration or exploitation activities” and “exploration or exploitation rights” have the same meanings as in section 276;

• (b) “exploration or exploitation assets” means assets used or intended for use in connection with exploration or exploitation activities carried on in the United Kingdom or a designated area;

• (c) “the old assets” and “the new assets” have the same meanings as in section 152;

and a company shall not be regarded for the purposes of this section as ceasing to be resident in the United Kingdom by reason only that it ceases to exist.

Deemed disposal of assets on company ceasing to be liable to U.K. taxation.

186

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Postponement of charge on deemed disposal under section 185 or 186.

187

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deemed disposal under section 185: ATED-related gains and losses

187A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Postponing gain or loss under section 185(2): interests in UK land

187B

• (1) This section applies if an interest in UK land is deemed to have been disposed of under section 185(2) by a company at any time.

• (2) The gain or loss that, but for this subsection, would have accrued to the company at that time is not to accrue at that time.

• (3) But, on a subsequent disposal by the company of the whole or part of the interest in UK land, the whole or a corresponding part of the gain or loss is treated as accruing on the subsequent disposal.

• (4) This gain or loss is in addition to any gain or loss that actually accrues on the subsequent disposal.

• (5) A company may elect for a disposal deemed to have been made under section 185(2) to be excluded from the operation of this section.

• (6) The election must be made within 2 years after the day on which the deemed disposal occurs.

• (7) In this section “interest in UK land” has the meaning given by section 1C.

Dual resident companies: deemed disposal of certain assets.

188

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Election for pooling

188A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “NRCGT group”

188B

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfers within an NRCGT group

188C

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Person chargeable to capital gains tax on NRCGT gains accruing to members of an NRCGT group

188D

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Further provision about group losses

188E

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Companies becoming eligible to join an NRCGT group

188F

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company ceasing to be a member of an NRCGT group

188G

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The responsible members of an NRCGT group

188H

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Joint and several liability of responsible members

188I

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The representative company of an NRCGT group

188J

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of sections 188A to 188J

188K

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recovery of tax otherwise than from tax-payer company

Capital distribution of chargeable gains: recovery of tax from shareholder.

189

• (1) This section applies where a person who is connected with a company resident in the United Kingdom receives or becomes entitled to receive in respect of shares in the company any capital distribution from the company, other than a capital distribution representing a reduction of capital, and—

• (a) the capital so distributed derives from the disposal of assets in respect of which a chargeable gain accrued to the company; or

• (b) the distribution constitutes such a disposal of assets;

and that person is referred to below as “the shareholder”.

• (2) If the corporation tax assessed on the company for the accounting period in which the chargeable gain accrues included any amount in respect of chargeable gains, and any of the tax assessed on the company for that period is not paid within 6 months from the date determined under subsection (3) below, the shareholder may by an assessment made within 2 years from that date be assessed and charged (in the name of the company) to an amount of that corporation tax—

• (a) not exceeding the amount or value of the capital distribution which the shareholder has received or become entitled to receive; and

• (b) not exceeding a proportion equal to the shareholder’s share of the capital distribution made by the company of corporation tax on the amount of that gain at the rate in force when the gain accrued.

• (3) The date referred to in subsection (2) above is whichever is the later of—

• (a) the date when the tax becomes due and payable by the company; and

• (b) the date when the assessment was made on the company.

• (4) Where the shareholder pays any amount of tax under this section, he shall be entitled to recover from the company a sum equal to that amount together with any interest paid by him under section 87A of the Management Act on that amount.

• (5) The provisions of this section are without prejudice to any liability of the shareholder in respect of a chargeable gain accruing to him by reference to the capital distribution as constituting a disposal of an interest in shares in the company.

• (6) With respect to chargeable gains accruing in accounting periods ending on or before such day as the Treasury may be order appoint this section shall have effect—

• (a) with the substitution for the words in subsection (3) after “above" of the words “ is the date when the tax becomes payable by the company ”; and

• (b) with the omission of the words in subsection (4) from “together" to the end of the subsection.

• (7) In this section “capital distribution” has the same meaning as in section 122.

Tax recoverable from another group company or controlling director.

190

• (1) This section applies where—

• (a) a chargeable gain has accrued to a company (“the taxpayer company”),

• (b) the condition in subsection (2) below is met, and

• (c) the whole or part of the corporation tax assessed on the company for the accounting period in which the gain accrued (“the relevant accounting period”) is unpaid at the end of the period of six months after it became payable.

• (2) The condition referred to in subsection (1)(b) above is—

• (a) that the taxpayer company is resident in the United Kingdom at the time when the gain accrued, or

• (b) that the gain is chargeable to corporation tax as a result of section 2B(3) or (4).

• (3) The following persons may, by notice under this section, be required to pay the unpaid tax—

• (a) if the taxpayer company was a member of a group at the time when the gain accrued—

• (i) a company which was at that time the principal company of the group, and

• (ii) any other company which in any part of the period of twelve months ending with that time was a member of that group and owned the asset disposed of, or any part of it, or where that asset is an interest or right in or over another asset, owned either asset or any part of either asset; and

• (b) if the taxpayer company was not resident in the United Kingdom at the time when the gain accrued, any person who is, or during the period of twelve months ending with the time when the gain accrued was, a controlling director of the taxpayer company or of a company which has, or within that period had, control over the taxpayer company.

• (4) The Board may serve a notice on a person within subsection (3) above requiring him, within 30 days of the service of the notice, to pay—

• (a) the amount which remains unpaid of the corporation tax assessed on the taxpayer company for the relevant accounting period, or

• (b) if less, an amount equal to corporation tax on the amount of the chargeable gain at the rate in force when the gain accrued.

• (5) The notice must state—

• (a) the amount of corporation tax assessed on the taxpayer company for the relevant accounting period that remains unpaid,

• (b) the date when it first became payable, and

• (c) the amount required to be paid by the person on whom the notice is served.

• (6) The notice has effect—

• (a) for the purposes of the recovery from that person of the amount required to be paid and of interest on that amount, and

• (b) for the purposes of appeals,

as if it were a notice of assessment and that amount were an amount of tax due from that person.

• (7) Any notice under this section must be served before the end of the period of three years beginning with the date on which the liability of the taxpayer company to corporation tax for the relevant accounting period is finally determined.

• (8) Where the unpaid tax is charged in consequence of a determination under paragraph 36 or 37 of Schedule 18 to the Finance Act 1998 (determination where no return delivered or return incomplete), the date mentioned in subsection (7) above shall be taken to be the date on which the determination was made.

• (9) Where the unpaid tax is charged in a self-assessment, including a self-assessment that supersedes a determination (see paragraph 40 of Schedule 18 to the Finance Act 1998), the date mentioned in subsection (7) above shall be taken to be the latest of—

• (a) the last date on which notice of enquiry may be given into the return containing the self-assessment;

• (b) if notice of enquiry is given, 30 days after the enquiry is completed;

• (c) if more than one notice of enquiry is given, 30 days after the last notice of completion;

• (d) if after such an enquiry the Inland Revenue amend the return, 30 days after notice of the amendment is issued;

• (e) if an appeal is brought against such an amendment, 30 days after the appeal is finally determined.

• (10) If the unpaid tax is charged in a discovery assessment, the date mentioned in subsection (7) above shall be taken to be—

• (a) where there is no appeal against the assessment, the date when the tax becomes due and payable;

• (b) where there is such an appeal, the date on which the appeal is finally determined.

• (11) A person who has paid an amount in pursuance of a notice under this section may recover that amount from the taxpayer company.

• (12) A payment in pursuance of a notice under this section is not allowed as a deduction in computing any income, profits or losses for any tax purposes.

• (13) In this section—

• “director”, in relation to a company, has the meaning given by section 67(1) and (2) of ITEPA 2003 and includes any person falling within section 452(1) of CTA 2010;

• “controlling director”, in relation to a company, means a director of the company who has control of it (construing control in accordance with sections 450 and 451 of CTA 2010);“group" and “principal company" have the meaning which would be given by section 170 if in that section for references to 75 per cent. subsidiaries there were substituted references to 51 per cent. subsidiaries.

Demergers

Tax exempt distributions.

192

• (1) This section has effect for facilitating certain transactions whereby trading activities carried on by a single company or group are divided so as to be carried on by 2 or more companies not belonging to the same group or by 2 or more independent groups.

• (2) Where a company makes a distribution which is exempt by virtue of section 1076 of CTA 2010—

• (a) the distribution shall not be a capital distribution for the purposes of section 122; and

• (b) sections 126 to 130 shall, with the necessary modifications, apply as if that company and the subsidiary whose shares are transferred were the same company and the distribution were a reorganisation of its share capital.

• (3) Subject to subsection (4) below, section 179 shall not apply in a case where a company ceases to be a member of a group by reason only of an exempt distribution.

• (4) Subsection (3) does not apply if within 5 years after the making of the exempt distribution there is chargeable payment; and the time for making an assessment under section ... 179 by virtue of this subsection shall not expire before the end of 3 years after the making of the chargeable payment.

• (5) In this section—

• “chargeable payment” has the meaning given in section 1088 of CTA 2010;

• “exempt distribution” means a distribution which is exempt by virtue of section 1076 or 1077 of CTA 2010; and

• “group” means a company which has one or more 75 per cent. subsidiaries together with that or those subsidiaries.

• (6) In determining for the purposes of this section whether one company is a 75 per cent. subsidiary of another, the other company shall be treated as not being the owner of—

• (a) any share capital which it owns directly in a body corporate if a profit on a sale of the shares would be treated as a trading receipt of its trade; or

• (b) any share capital which it owns indirectly and which is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt.

Disposals by companies with substantial shareholding

Exemptions for gains or losses on disposal of shares etc

192A

Schedule 7AC (exemptions for disposal of shares etc by companies with substantial shareholding) has effect.

Chapter II — Oil and mining industries

Oil exploration and exploitation

Roll-over relief not available for gains on oil licences.

193

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disposals of oil licences relating to undeveloped areas.

194

• (1) In this section any reference to a disposal (including a part disposal) is a reference to a disposal made by way of a bargain at arm’s length.

• (2) If, at the time of the disposal, the licence relates to an undeveloped area, then, to the extent that the consideration for the disposal consists of—

• (a) another licence which at that time relates to an undeveloped area or an interest in another such licence, or

• (b) an obligation to undertake exploration work or appraisal work in an area which is or forms part of the licensed area in relation to the licence disposed of,

the value of that consideration shall be treated as nil for the purposes of this Act.

• (3) If the disposal of a licence which, at the time of the disposal, relates to an undeveloped area is part of a larger transaction under which one party makes to another disposals of 2 or more licences, each of which at the time of the disposal relates to an undeveloped area, the reference in subsection (2)(b) above to the licensed area in relation to the licence disposed of shall be construed as a reference to the totality of the licensed areas in relation to those 2 or more licences.

• (4) In relation to a disposal of a licence which, at the time of the disposal, relates to an undeveloped area, being a disposal—

• (a) which is a part disposal of the licence in question, and

• (b) part but not the whole of the consideration for which falls within paragraph (a) or paragraph (b) of subsection (2) above,

section 42 shall not apply unless the amount or value of the part of the consideration which does not fall within one of those paragraphs is less than the aggregate of the amounts which, if the disposal were a disposal of the whole of the licence rather than a part disposal, would be—

• (i) the relevant allowable expenditure, as defined in section 53; and

• (ii) the indexation allowance on the disposal.

• (5) Where section 42 has effect in relation to such a disposal as is referred to in subsection (4) above, it shall have effect as if, for subsection (2) thereof, there were substituted the following subsection—

(2) The apportionment shall be made by reference to— (a) the amount or value of the consideration for the disposal on the one hand (call that amount or value A), and (b) the aggregate referred to in section 194(4) on the other hand (call that aggregate C), and the fraction of the said sums allowable as a deduction in computing the amount of the gain (if any) accruing on the disposal shall be— $AC$ and the remainder shall be attributed to the part of the property which remains undisposed of.

Allowance of certain drilling expenditure etc.

195

• (1) On the disposal of a licence, relevant qualifying expenditure incurred by the person making the disposal—

• (a) in searching for oil anywhere in the licensed area, or

• (b) in ascertaining the extent or characteristics of any oil-bearing area the whole or part of which lies in the licensed area or what the reserves of oil of any such oil-bearing area are,

shall be treated as expenditure falling within section 38(1)(b).

• (2) Expenditure incurred as mentioned in subsection (1) above is relevant expenditure if, and only if—

• (a) it is expenditure of a capital nature on research and development; and

• (b) either it is expenditure in respect of which the person was entitled to an allowance under section 441 of the Capital Allowances Act (research and development allowances) for a relevant chargeable period which began before the date of the disposal or it would have been such expenditure if the trading condition had been fulfilled, and

• (c) on the disposal, section 443 of that Act (disposal values) applies in relation to the expenditure or would apply if the trading condition had been fulfilled (and the expenditure had accordingly been qualifying expenditure under Part 6 of that Act).

• (3) In subsection (2) above and subsection (4) below, the expression “if the trading condition had been fulfilled” means, in relation to expenditure of a capital nature on research and development, if, after the expenditure was incurred but before the disposal concerned was made, the person incurring the expenditure had set up and commenced a trade connected with that research and development; and in subsection (2)(b) above—

• “relevant chargeable period” has the same meaning as in section 441 of the Capital Allowances Act; ...

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) Relevant expenditure is qualifying expenditure only to the extent that it does not exceed the disposal value which, by reason of the disposal—

• (a) is required to be brought into account under section 443 of the Capital Allowances Act; or

• (b) would be required to be so brought into account if the trading condition had been fulfilled (and the expenditure had accordingly been qualifying expenditure under Part 6 of that Act).

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) Where, on the disposal of a licence, subsection (1) above has effect in relation to any relevant qualifying expenditure in respect of which the person had not in fact been entitled to an allowance as mentioned in subsection (2)(b) above—

• (a) no allowance shall be made in respect of that expenditure under section 441 of the Capital Allowances Act; ...

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7) Where, on the disposal of a licence which is a part disposal, subsection (1) above has effect in relation to any relevant qualifying expenditure, then, for the purposes of section 42, that expenditure shall be treated as wholly attributable to what is disposed of (and, accordingly, shall not be apportioned as mentioned in that section).

• (8) In this section “research and development” has the same meaning as in Part 6 of the Capital Allowances Act (research and development allowances).

Oil licence swaps

195A

• (1) Sections 195B to 195F apply for the purposes of corporation tax on chargeable gains.

• (2) In those sections—

• “licence-consideration swap” means a case where conditions A, B, C and D are met;

• “mixed-consideration swap” means a case where conditions A, B, C and E are met.

• (3) Condition A is that a company (“company A”) disposes of one or more UK licences to another company (“company B”), by way of a bargain at arm's length (“disposal A”).

• (4) Condition B is that company B disposes of one or more UK licences to company A, by way of a bargain at arm's length (“disposal B”).

• (5) Condition C is that either or both of the following paragraphs applies—

• (a) the licence, or at least one of the licences, comprised in disposal A relates to a developed area;

• (b) the licence, or at least one of the licences, comprised in disposal B relates to a developed area.

• (6) Condition D is that both—

• (a) disposal A is the only consideration given for disposal B, and

• (b) disposal B is the only consideration given for disposal A.

• (7) Condition E is that either—

• (a) disposal A is the only consideration given for disposal B, or

• (b) disposal B is the only consideration given for disposal A,

(and accordingly one of the disposals is part of the consideration given for the other disposal).

• (8) In this section and sections 195B to 196 a reference to disposal of a UK licence includes—

• (a) a disposal of an interest in a UK licence, and

• (b) a disposal of a UK licence, or an interest in a UK licence, only so far as the licence relates to part of the licensed area.

Licence-consideration swap

195B

• (1) This section applies to a licence-consideration swap.

• (2) Each company participating in the swap is to be treated as follows.

• (3) As regards the licence, or each licence, which the company disposes of, the company is to be treated as if it had disposed of that licence for a consideration of such amount as to secure that on the disposal neither a gain nor a loss accrues to the company.

• (4) In a case where the company acquires only one licence, the company is to be treated as if it had acquired the licence for a consideration of the same amount as the deemed disposal consideration.

• (5) In a case where the company acquires two or more licences, as regards each licence acquired, the company is to be treated as if it had acquired that licence for a consideration of—

$$DDC×ATA$where—DDC is the deemed disposal consideration,A is the value of the licence acquired, and TA is total value of all the licences acquired.$

• (6) In this section “deemed disposal consideration”, in relation to a company participating in the swap, means—

• (a) the amount of the consideration for which the company is, under subsection (3), treated as having disposed of its licence (if the company disposes of only one licence), or

• (b) the aggregate of all such amounts (if the company disposes of two or more licences).

Company that receives mixed consideration: N exceeds C

195C

• (1) This section applies to a mixed-consideration swap if—

• (a) the no gain/no loss loss amount (“N”) of the company that receives the mixed consideration (“company R”), exceeds

• (b) the amount of non-licence consideration (“C”) which company R receives.

• (2) In a case where company R acquires only one licence, company R is to be treated as if it had acquired the licence for a consideration of—

$N-C$

• (3) In a case where company R acquires two or more licences, as regards each licence acquired, company R is to be treated as if it had acquired the licence for a consideration of—

$$(N-C)×ATA$where—A is the value of the licence acquired, and TA is total value of all the licences acquired.$

• (4) The disposal by company R of a licence under the swap is to be taken to be one on which neither a gain nor a loss accrues.

• (5) But (despite subsection (4)), the disposal by company R is not a no gain/no loss disposal for the purposes of section 56.

• (6) For the purposes of the application of sections 53 and 54, any enactment is to be disregarded insofar as it provides that, if the other company which acquires a licence under the swap (“company G”) subsequently disposes of the licence, company R's acquisition of the licence is to be treated as company G's acquisition of it.

• (7) In this section the reference to the no gain/no loss amount of company R is a reference to—

• (a) in a case where company R disposes of only one licence, company R's no gain/no loss amount in relation to that disposal, or

• (b) in a case where company R disposes of two or more licences, the aggregate of company R's no gain/no loss amounts in relation to all of those disposals.

Company that receives mixed consideration: N does not exceed C

195D

• (1) This section applies to a mixed-consideration swap if—

• (a) the no gain/no loss amount (“N”) of the company that receives the mixed consideration (“company R”) does not exceed

• (b) the amount of non-licence consideration (“C”) which company R receives.

• (2) As regards the licence, or each licence, which company R acquires, company R is to be treated as if it had acquired the licence for nil consideration.

• (3) In a case where company R disposes of only one licence, company R is to be treated as if, on the disposal of the licence, there had arisen a gain of—

$C-N$

• (4) In a case where company R disposes of two or more licences, as regards each licence disposed of, company R is to be treated as if, on the disposal of the licence, there had arisen a gain of—

$$(C-N)×DTD$where—D is the value of the licence disposed of, and TD is total value of all the licences disposed of.$

Company that gives mixed consideration

195E

• (1) This section applies to a mixed-consideration swap—

• (a) whatever the no gain/no loss amount (“N”) of the company that gives the mixed consideration (“company G”), and

• (b) whatever the amount of the non-licence consideration (“C”) which company G gives.

• (2) In a case where company G acquires only one licence, company G is to be treated as if it had acquired the licence for a consideration of—

$N+C$

• (3) In a case where company G acquires two or more licences, as regards each licence acquired, company G is to be treated as if it had acquired the licence for a consideration of—

$$(N+C)×ATA$where—A is the value of the licence acquired, and TA is total value of all the licences acquired.$

• (4) The disposal by company G of a licence under the swap is to be taken to be one on which neither a gain nor a loss accrues.

• (5) But (despite subsection (4)), the disposal by company G is not a no gain/no loss disposal for the purposes of section 56.

• (6) For the purposes of the application of sections 53 and 54, any enactment is to be disregarded insofar as it provides that, if the other company which acquires a licence under the swap (“company R”) subsequently disposes of the licence, company G's acquisition of the licence is to be treated as company R's acquisition of it.

• (7) In this section the reference to the no gain/no loss amount of company G is a reference to—

• (a) in a case where company G disposes of only one licence, company G's no gain/no loss amount in relation to that disposal, or

• (b) in a case where company G disposes of two or more licences, the aggregate of company G's no gain/no loss amounts in relation to all of those disposals.

Reimbursed expenditure

195F

• (1) This section applies if—

• (a) expenditure is incurred by company A or company B (see section 195A) on a licence disposed of by it under a licence-consideration swap or mixed-consideration swap,

• (b) the expenditure is incurred before the disposal,

• (c) the expenditure falls within section 38(1)(b), and

• (d) the expenditure is reimbursed or effectively reimbursed (whether by way of adjustment of the non-licence consideration (if any) or otherwise) by the company (“the other company”) to whom the disposal is made (whether before, on or after the date of the disposal).

• (2) The expenditure is to be treated for the purposes of this Act as expenditure —