Commentary on Sections Overview Chapter 5: Continuity of treatment on transfers within groups Section 632: Transferee leaving group because of exempt distribution
1732.This section deems the transferee within section 625 to have assigned (and immediately reacquired) the rights and liabilities under the derivative contract at the time a “chargeable payment” is made, for a consideration equal to the fair value of the rights and liabilities at the time of that payment, if it left the group solely because of an exempt distribution. It is based on paragraph 30A(3), (4), (5), (6), (7) and (8) of Schedule 26 to FA 2002.
1733.A “chargeable payment” is broadly a payment made in connection with tax avoidance or otherwise than for genuine commercial reasons.
1734.Conditions A and B, in subsections (3) and (4), are the same as the conditions in section 631(3) and (4). See the commentary on that section.