|
| |
|
424 | Reorganisations involving loan relationships |
| |
(1) | This section applies if— |
| |
(a) | sections 127 to 130 of TCGA 1992 (reorganisations: equation of original |
| |
| |
(i) | apply in relation to a reorganisation, or |
| 5 |
(ii) | would so apply but for section 116(5) of that Act (which |
| |
disapplies those sections where the original shares or the new |
| |
holding consists of or includes a qualifying corporate bond), |
| |
(b) | the original shares consist of or include an asset representing a loan |
| |
| 10 |
| |
(i) | section 422 or 423 applies as a result of condition B in section 421 |
| |
being met in relation to the transfer in the course of which the |
| |
| |
(ii) | condition C in section 421 is met in relation to that transfer. |
| 15 |
(2) | For the purposes of this Part such debits and credits are to be brought into |
| |
account as would be brought into account if the reorganisation were a disposal |
| |
of the asset representing the loan relationship for consideration of an amount |
| |
equal to its notional carrying value. |
| |
(3) | For the purposes of this section, the notional carrying value of that asset is the |
| 20 |
amount which would have been its carrying value in the accounts of the |
| |
original holder if a period of account had ended immediately before the date |
| |
when the reorganisation occurred. |
| |
| |
“carrying value” has the same meaning as it has for the purposes of |
| 25 |
section 316 (see section 317), |
| |
“original holder” means a person holding the original shares immediately |
| |
before the reorganisation, |
| |
“original shares” has the meaning given by section 126(1) of TCGA 1992 |
| |
(application of sections 126 to 131 of that Act), and |
| 30 |
“reorganisation” includes anything to which sections 127 to 130 of that Act |
| |
apply as if it were a reorganisation. |
| |
(5) | This section is subject to— |
| |
(a) | section 425 (original holder using fair value accounting), and |
| |
(b) | section 429 (disapplication of Chapter where transparent entities |
| 35 |
| |
425 | Original holder using fair value accounting |
| |
(1) | This section applies instead of section 424 if, in a case where that section would |
| |
otherwise apply, the original holder is regarded for the purposes of this section |
| |
as using fair value accounting in respect of the loan relationship constituting or |
| 40 |
included in the original shares. |
| |
(2) | The amount which is to be brought into account by the original holder in |
| |
respect of the reorganisation (“the disposal amount”) is the fair value of the |
| |
asset representing the loan relationship as at the date when the reorganisation |
| |
occurred, or of the rights under or interest in that relationship as at that date. |
| 45 |
|
| |
|
| |
|
(3) | For any accounting period in which a successor creditor company is a party to |
| |
the loan relationship, for the purpose of determining the credits and debits to |
| |
be brought into account in respect of the relationship for the purposes of this |
| |
Part, the successor creditor company is treated as if it had acquired the asset |
| |
representing the loan relationship for consideration of an amount equal to the |
| 5 |
| |
(4) | Subsections (4) and (5) of section 423 apply for the purposes of this section as |
| |
they apply for the purposes of that section, but taking the references in that |
| |
section to the transferor as references to the original holder. |
| |
| 10 |
“successor creditor company” means a company in relation to which the |
| |
loan relationship constituting or included in the original shares is a |
| |
creditor relationship immediately after the reorganisation, and |
| |
“original holder” and “original shares” have the same meaning as in |
| |
| 15 |
(6) | This section is subject to section 429 (disapplication of Chapter where |
| |
transparent entities involved). |
| |
Exception for tax avoidance cases |
| |
| |
(1) | This Chapter does not apply in relation to the transfer of business if— |
| 20 |
(a) | the transfer of business is not effected for genuine commercial reasons, |
| |
| |
(b) | the transfer of business forms part of a scheme or arrangements of |
| |
which the main purpose, or one of the main purposes, is avoiding |
| |
liability to corporation tax, capital gains tax or income tax. |
| 25 |
| |
| |
(a) | the companies mentioned in section 421(3)(a), (4)(a) or (5)(a) have |
| |
applied to the Commissioners for Her Majesty’s Revenue and Customs, |
| |
| 30 |
(b) | the Commissioners have notified them that they are satisfied that |
| |
subsection will not have that effect. |
| |
427 | Procedure on application for clearance |
| |
(1) | This section applies in relation to an application under section 426(2). |
| |
(2) | The application must be in writing and must contain particulars of the |
| 35 |
operations which are to be effected. |
| |
(3) | The Commissioners for Her Majesty’s Revenue and Customs may by notice |
| |
require the applicant to provide further particulars for the purpose of enabling |
| |
them to make their decision. |
| |
(4) | Such a notice may only be given within 30 days of the receipt of the application |
| 40 |
or of any further particulars previously required under subsection (3). |
| |
|
| |
|
| |
|
(5) | If such a notice is not complied with within 30 days or such longer period as |
| |
the Commissioners for Her Majesty’s Revenue and Customs may allow, they |
| |
need not proceed further on the application. |
| |
428 | Decision on application for clearance |
| |
(1) | The Commissioners for Her Majesty’s Revenue and Customs must notify their |
| 5 |
decision on an application under section 426(2) to the applicant— |
| |
(a) | within 30 days of receiving the application, or |
| |
(b) | if they give a notice under section 427(3), within 30 days of the notice |
| |
| |
(2) | If the Commissioners for Her Majesty’s Revenue and Customs— |
| 10 |
(a) | notify the applicant that they are not satisfied as mentioned in section |
| |
| |
(b) | do not notify their decision to the applicant within the time required by |
| |
| |
| the applicant may within 30 days of the notification or of that time require |
| 15 |
them to transmit the application to the tribunal, together with any notice given |
| |
and further particulars provided under section 427(3). |
| |
(3) | In that case any notification by the tribunal has effect for the purposes of |
| |
section 426(2)(b) as if it were a notification by the Commissioners for Her |
| |
Majesty’s Revenue and Customs. |
| 20 |
(4) | If any particulars provided under section 427 do not fully and accurately |
| |
disclose all facts and considerations material for the decision— |
| |
(a) | of the Commissioners for Her Majesty’s Revenue and Customs, or |
| |
| |
| any resulting notification by the Commissioners for Her Majesty’s Revenue |
| 25 |
and Customs or the tribunal is void. |
| |
| |
429 | Disapplication of Chapter where transparent entities involved |
| |
(1) | This Chapter does not apply in relation to the transfer of business if the |
| |
transferor is a transparent entity. |
| 30 |
(2) | If any transferee is a transparent entity, sections 424 and 425 (reorganisations |
| |
involving loan relationships) do not apply. |
| |
(3) | In this section “transparent entity” means a company which is resident in a |
| |
member State other than the United Kingdom and does not have an ordinary |
| |
| 35 |
(4) | For the meaning of “resident in a member State”, see section 430. |
| |
| |
| |
(1) | In this Chapter “company” means any entity listed as a company in the Annex |
| |
to the Mergers Directive. |
| 40 |
|
| |
|
| |
|
(2) | For the purposes of this Chapter, a company is resident in a member State if— |
| |
(a) | it is within a charge to tax under the law of the State as being resident |
| |
| |
(b) | it is not regarded, for the purpose of any double taxation relief |
| |
arrangements to which the State is a party, as resident in a territory not |
| 5 |
| |
| |
European cross-border mergers |
| |
| |
431 | Introduction to Chapter |
| 10 |
(1) | This Chapter applies if the following conditions are met— |
| |
| |
(b) | in the case of a merger within subsection (3)(a), (b) or (c), condition E, |
| |
| |
(c) | in the case of a merger within subsection (3)(c) or (d), condition F, |
| 15 |
| but see section 437 (tax avoidance etc) and section 438 (disapplication of |
| |
Chapter where transparent entities involved). |
| |
(2) | Sections 435 and 436 (reorganisations involving loan relationships) also apply |
| |
in cases that would be within subsection (1) apart from condition D not being |
| |
met if, in addition to the conditions in section 435(1)(a) and (b), condition G is |
| 20 |
met in relation to a transfer in the course of the merger in which the |
| |
reorganisation in question occurs. |
| |
| |
(a) | an SE is formed by the merger of two or more companies in accordance |
| |
with Articles 2(1) and 17(2)(a) or (b) of Council Regulation (EC) No. |
| 25 |
2157/2001 on the Statute for a European company (Societas Europaea), |
| |
(b) | an SCE is formed by the merger of two or more co-operative societies, |
| |
at least one of which is a society registered under the Industrial and |
| |
Provident Societies Act 1965 (c. 12), in accordance with Articles 2(1) and |
| |
19 of Council Regulation (EC) No. 1435/2003 on the Statute for a |
| 30 |
European Co-operative Society (SCE), |
| |
(c) | a merger is effected by the transfer by one or more companies of all |
| |
their assets and liabilities to a single existing company, or |
| |
(d) | a merger is effected by the transfer by two or more companies of all |
| |
their assets and liabilities to a single new company (other than an SE or |
| 35 |
an SCE) in exchange for the issue by the transferee, to each person |
| |
holding shares in or debentures of a transferor, of shares or debentures. |
| |
(4) | Condition B is that each merging company is resident in a member State. |
| |
(5) | Condition C is that the merging companies are not all resident in the same |
| |
| 40 |
(6) | Condition D is that immediately after the merger the transferee is within the |
| |
charge to corporation tax. |
| |
| |
|
| |
|
| |
|
(a) | the transfer of assets and liabilities to the transferee in the course of the |
| |
merger is made in exchange for the issue of shares or debentures by the |
| |
transferee to each person holding shares in or debentures of a |
| |
| |
(b) | that transfer is not so made only because, and only so far as, the |
| 5 |
transferee is prevented from so issuing such shares or debentures by |
| |
section 658 of the Companies Act 2006 (c. 46) (general rule against |
| |
limited company acquiring own shares) or by a corresponding |
| |
provision of the law of another member State preventing such an issue. |
| |
(8) | Condition F is that in the course of the merger each transferor ceases to exist |
| 10 |
without being in liquidation (within the meaning given by section 247 of the |
| |
Insolvency Act 1986 (c. 45)). |
| |
| |
(a) | in the course of the merger a company resident in the United Kingdom |
| |
(“company A”) transfers to a company resident in another member |
| 15 |
State all assets and liabilities relating to a business which company A |
| |
carried on in a member State other than the United Kingdom through a |
| |
permanent establishment, and |
| |
(b) | that transfer includes the transfer of an asset or liability representing a |
| |
| 20 |
(10) | In this Chapter, “the merger” and “the merging companies” have the same |
| |
meaning as in this section. |
| |
| |
(a) | section 432 for the meaning of “the transferee” and “transferor”, and |
| |
(b) | section 439 for the meaning of “company”, “co-operative society” and |
| 25 |
“resident in a member State”. |
| |
432 | Meaning of “the transferee” and “transferor” |
| |
(1) | In this Chapter, “the transferee” means— |
| |
(a) | in relation to a merger within section 431(3)(a), the SE, |
| |
(b) | in relation to a merger within section 431(3)(b), the SCE, and |
| 30 |
(c) | in relation to a merger within section 431(3)(c) or (d), the company to |
| |
which assets and liabilities are transferred. |
| |
(2) | In this Chapter “transferor” means— |
| |
(a) | in relation to a merger within section 431(3)(a), a company merging to |
| |
| 35 |
(b) | in relation to a merger within section 431(3)(b), a co-operative society |
| |
merging to form the SCE, and |
| |
(c) | in relation to a merger within section 431(3)(c) or (d), a company |
| |
transferring all its assets and liabilities. |
| |
Transfers of loan relationships at notional carrying value |
| 40 |
433 | Transfer of loan relationship at notional carrying value |
| |
(1) | This section applies if in the course of the merger a transferor transfers an asset |
| |
or liability representing a loan relationship to the transferee. |
| |
|
| |
|
| |
|
(2) | For the purpose of determining the credits and debits to be brought into |
| |
account in respect of the loan relationship in accordance with this Part, the |
| |
transferor and the transferee are treated as having entered into the transfer of |
| |
that asset or liability for consideration of an amount equal to the notional |
| |
carrying value of the asset or liability. |
| 5 |
(3) | For the purposes of this section— |
| |
(a) | “carrying value” has the same meaning as it has for the purposes of |
| |
section 316 (see section 317), and |
| |
(b) | “notional carrying value”, in relation to an asset or liability, means the |
| |
amount which would have been its carrying value in the accounts of the |
| 10 |
transferor if a period of account had ended immediately before the date |
| |
when the transferor ceased to be a party to the loan relationship. |
| |
(4) | This section is subject to section 434. |
| |
434 | Transferor using fair value accounting |
| |
| 15 |
otherwise apply, the transferor is regarded for the purposes of this section as |
| |
using fair value accounting in respect of the loan relationship (see subsection |
| |
| |
(2) | The amount which is to be brought into account by the transferor in respect of |
| |
the transfer of the asset or liability mentioned in section 433(1) (“the |
| 20 |
transferor’s amount”) is— |
| |
(a) | if an asset is to be brought into account, its fair value as at the date when |
| |
the transferee becomes a party to the loan relationship, or the fair value |
| |
of the rights under or interest in it as at that date, and |
| |
(b) | if a liability is to be brought into account, its fair value as at that date. |
| 25 |
(3) | For any accounting period in which the transferee is a party to the loan |
| |
relationship, for the purpose of determining the credits and debits to be |
| |
brought into account in respect of it for the purposes of this Part, the transferee |
| |
is treated as if it had acquired the asset or liability representing the relationship |
| |
for consideration of an amount equal to the transferor’s amount. |
| 30 |
(4) | The transferor is regarded for the purposes of this section as using fair value |
| |
accounting in respect of the loan relationship only if the credits and debits to |
| |
be brought into account for the purposes of this Part as respects the |
| |
relationship are determined on that basis. |
| |
(5) | It does not matter for the purposes of subsection (4) if the transferor does not |
| 35 |
otherwise use fair value accounting in respect of the loan relationship. |
| |
435 | Reorganisations involving loan relationships |
| |
(1) | This section applies if— |
| |
(a) | sections 127 to 130 of TCGA 1992 (reorganisations: equation of original |
| |
| 40 |
(i) | apply in relation to a reorganisation, or |
| |
(ii) | would so apply but for section 116(5) of that Act (which |
| |
disapplies those sections where the original shares or the new |
| |
holding consists of or includes a qualifying corporate bond), |
| |
|
| |
|
| |
|
(b) | the original shares consist of or include an asset representing a loan |
| |
| |
(c) | section 433 or 434 applies in relation to a transfer in the course of the |
| |
merger in which the reorganisation occurs or, in a case where those |
| |
sections would apply apart from condition D in section 431 not being |
| 5 |
met, condition G in that section is met in relation to such a transfer. |
| |
(2) | For the purposes of this Part such debits and credits are to be brought into |
| |
account as would be brought into account if the reorganisation were a disposal |
| |
of the asset representing the loan relationship for consideration of an amount |
| |
equal to its notional carrying value. |
| 10 |
(3) | For the purposes of this section, the notional carrying value of that asset is the |
| |
amount which would have been its carrying value in the accounts of the |
| |
original holder if a period of account had ended immediately before the date |
| |
when the reorganisation occurred. |
| |
| 15 |
“carrying value” has the same meaning as it has for the purposes of |
| |
section 316 (see section 317), |
| |
“original holder” means a person holding the original shares immediately |
| |
before the reorganisation, |
| |
“original shares” has the meaning given by section 126(1) of TCGA 1992 |
| 20 |
(application of sections 126 to 131 of that Act), and |
| |
“reorganisation” includes anything to which sections 127 to 130 of that Act |
| |
apply as if it were a reorganisation. |
| |
(5) | This section is subject to— |
| |
(a) | section 436 (original holder using fair value accounting), and |
| 25 |
(b) | section 438 (disapplication of Chapter where transparent entities |
| |
| |
436 | Original holder using fair value accounting |
| |
(1) | This section applies instead of section 435 if, in a case where that section would |
| |
otherwise apply, the original holder is regarded for the purposes of this section |
| 30 |
as using fair value accounting in respect of the loan relationship constituting or |
| |
included in the original shares. |
| |
(2) | The amount which is to be brought into account by the original holder in |
| |
respect of the reorganisation (“the disposal amount”) is the fair value of the |
| |
asset representing the loan relationship as at the date when the reorganisation |
| 35 |
occurred, or of the rights under or interest in that relationship as at that date. |
| |
(3) | For any accounting period in which a successor creditor company is a party to |
| |
the loan relationship, for the purpose of determining the credits and debits to |
| |
be brought into account in respect of the relationship for the purposes of this |
| |
Part, the successor creditor company is treated as if it had acquired the asset |
| 40 |
representing the loan relationship for consideration of an amount equal to the |
| |
| |
(4) | Subsections (4) and (5) of section 434 apply for the purposes of this section as |
| |
they apply for the purposes of that section, but taking the references in that |
| |
section to the transferor as references to the original holder. |
| 45 |
| |
|
| |
|