Introduction Details of the Section
2.The section inserts new provisions into existing legislation within Part 5 of TCGA 1992 and Part 8 CTA 2009.
3.Subsection (1) inserts new section 162B and new section 162C into TCGA 1992.
4.Subsection (1) of new section 162B provides that the section applies where a company transfers its business to its shareholders and a claim to disincorporation relief is made.
5.Subsection (2) provides that the transfer of any qualifying asset by the company is deemed to be for a consideration which is equal to the lower of the cost of the asset to the company, as determined by section 38 of TCGA 1992, and the market value of the asset.
6.Subsection (3) defines a qualifying asset as goodwill or an interest in land, other than land held as trading stock.
7.Subsection (4) excludes goodwill falling within new section 162C TCGA 1992 (post-FA 2002 goodwill) from subsection (2).
8.Subsection (1) of new section 162C TCGA 1992 provides that this section applies where a company transfers its business to its shareholders, a claim to disincorporation relief is made and any goodwill is post-FA 2002 (i.e. new section 849A CTA 2009 applies to the transfer of goodwill).
9.Subsection (2) provides that goodwill to which the section applies acquired by the shareholders from the company is acquired for a consideration equal to the transfer value determined by new section 849A CTA 2009.
10.Subsections 4(2) and 4(3) amend Chapter 13 of Part 8 CTA 2009, adding a new subsection 845(4)(e) (disincorporation relief) to the list of exceptions to the basic rule.
11.Subsection 4(4) inserts new section 849A CTA 2009 immediately after section 849 CTA 2009.
12.Subsection (1) of new section 849A provides that new section 849A CTA 2009 applies where a company transfers its business to some or all of its shareholders and a claim to disincorporation relief is made.
13.Subsection (2) provides that the transfer value of goodwill within Part 8 CTA 2009 is the lower of the tax written-down value of the goodwill or market value where the realisation of goodwill is dealt with under section 735 CTA 2009 (asset written down for tax purposes).
14.Subsection (3) provides that the transfer value of goodwill within Part 8 CTA 2009 is the lower of cost or market value where section 736 applies (asset shown in balance sheet and not written down for tax purposes).
15.Subsection (4) provides that the transfer value is nil where section 738 applies (asset not shown in balance sheet).
16.Subsection (5) provides that the tax written-down value is a reference to the tax written-down value immediately before the transfer.
17.Subsection (6) defines “the cost of the goodwill” as the cost recognised for tax purposes (sections 736(6) and (7) of CTA 2009).
18.Subsection (7) provides that the same definition of market value is to be used as that in section 845(5) of CTA 2009.
19.Subsection 4(5) of the section provides that the amendments made by this section have effect to business transfers occurring on or after 1 April 2013.