Introduction Details of the Section
2.Subsection (1)(a) amends subsection (4) of section 140 of TCGA to deem a chargeable gain to accrue to the transferor company on a disposal of securities received in exchange for the transfer of an overseas branch’s assets to a non-resident company. This replaces the previous mechanism for charging a postponed gain which increased the consideration received on a subsequent disposal of securities. The effect is to ensure that a charge will arise on the disposal of any securities, whether or not they are otherwise exempted from the charge to corporation tax on chargeable gains.
3.Subsection (1)(b) inserts new subsection (4A) into section 140. This clarifies that any postponed chargeable gain that is deemed to accrue is in addition to any gain or loss that accrues to a transferor company on a disposal of the securities themselves.
4.Subsection (2) provides a consequential amendment by omitting paragraph 35 to Schedule 7AC to TCGA. Paragraph 35 currently provides for a charge to arise on securities that are otherwise exempted from CT on chargeable gains under the substantial shareholdings exemption. Where a company disposes of shares that are exempt from chargeable gains under the Schedule, and which were received in exchange for a transfer of overseas assets to which section 140 applied, a gain is deemed to accrue to the transferor under the amended section 140(4) TCGA. Paragraph 35 of Schedule 7AC achieved this same result and is not now required.
5.Subsection (3) provides that changes made by the section will have effect in relation to any disposal of securities that takes place on or after 6 January 2010.