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CTA09/PART8/S787

Demergers

In broad terms there is a demerger where trading activities carried on by a single company or group of companies are divided so as to be carried on by two or more independent companies or groups. »Ê¹ÚÌåÓýappre are special tax rules for demergers that fall within the scope of CTA10/S1075 (see CTM17200 onwards).

Exception from degrouping

CTA09/S787 disapplies the degrouping adjustment in CTA09/S780 and CTA09/S785, where a company ceases to be a member of a group by reason only of an exempt distribution within CTA10/S1075.

Reinstatement of degrouping adjustment

If, within five years of making the exempt distribution, there is a ‘chargeable payment� then CTA09/S780 and CTA09/S785 do have effect. Because of the uncertainty as to whether or not returns will have become final, enquiries can still be opened etc. CTA09/S787(3) permits all such necessary adjustments by way of assessment, amendment of returns, or otherwise to be made to reinstate the effects of CTA09/S780 and CTA09/S785.

For the meaning of ‘chargeable payment� in this context see CTM17290.