»Ê¹ÚÌåÓýapp

Six different types of relief are within the scope of the legislation (see CTM34505) because they have the potential for avoidance. »Ê¹ÚÌåÓýapp reliefs concerned all relate to CG or capital allowance provisions. »Ê¹ÚÌåÓýappy are not available in the circumstances below.

CG

• Where there is a transfer of an asset to a dual resident investing company from another member of the group, the no gain/no loss basis treatment of the member making the disposal under TCGA92/S171 (see CG47005 onwards) is denied by TCGA92/S171 (2).
• Where the member of the group acquiring the new assets is a dual resident investing company, the treatment of all the trades carried on by members of the group as a single trade under TCGA92/S175 (1) (see CG45932).

Capital allowances (where the buyer is a dual resident investing company)

• Parties under common control are prevented from making an election under CAA01/S569 (see CA13100) by CAA01/S570 (2)(b). Under CAA01/S568 the sale is at market value.
• If the parties are also connected persons and the sale is of machinery or plant at less than market value, disposal value is at market value, CAA01/S61 Table item 2 (see CA23250).

Capital allowances (where there is a succession to a trade by a dual resident investing company)

• Where there is a company reconstruction without change of control, the operation of the continuation treatment in CTA10/S940A (see CA15400) is prevented by CTA10/S949.
• If the parties are also connected persons, a continuation election under CAA01/S266 (2) is prevented by subsection (1)(c).

»Ê¹ÚÌåÓýappse limitations, introduced by F(2)A87/S64, only come into effect when the event that would otherwise have triggered the application of these provisions takes place on or after 1 April 1987 and at this time the successor/acquiring company is a dual resident investing company. It is irrelevant whether or not that company is a dual resident investing company at the time the asset or trade is finally disposed of outside the group. »Ê¹ÚÌåÓýapp provisions apply to all dual resident investing companies, not only to those submitting accounts which show a loss. Indeed the accounts of dual resident investing companies engaging in these transfers for reasons of avoidance could well show a profit for UK tax purposes.

»Ê¹ÚÌåÓýapp various provisions also apply to dual resident investing companies that have never exploited the rules to obtain a double deduction and which have made a profit. If the application of any of these provisions, in these circumstances is disputed advise CTIS (Business International).