Commentary on Sections Schedule 2: Taxation provisions relating to re-structuring etc
411.The purpose of this schedule is to ensure that the restructuring of the Royal Mail group enabled by Part 1 of the Act does not give rise to unintended tax consequences. Paragraphs 1 and 2 refer to the transfer of securities of subsidiaries of Royal Mail Holdings to the Secretary of State, the Treasury, a nominee of either of them, or a company wholly owned by the Crown. Paragraphs 3-6 apply to the transfers of property, rights and liabilities under the transfer schemes as set out in Schedule 1. Paragraphs 7 and 8 refer to the transfer of securities of Royal Mail Holdings or a subsidiary of Royal Mail Holdings where the Crown owns 51% of the company immediately before the disposal.
412.Paragraph 1(1) sets out the circumstances in which paragraph 1 applies and paragraph 1(2) provides that such a disposal will be treated as a no gain/no loss disposal for capital gains purposes. Paragraphs 1(3) and 1(4) prevent degrouping charges arising for the purposes of corporation tax on chargeable gains and stamp duty land tax, as a result of such a disposal. Paragraph 1(5) ensures that stamp duty will not be chargeable as a result of the disposal.
413.Paragraph 2 ensures that the effect of paragraph 1 will not prevent a degrouping charge arising if the subsidiary leaves a new group as a result of a subsequent disposal of securities of the subsidiary.
414.Paragraph 3 defines a “relevant transfer”, “transferor” and “transferee” with regard to the provisions in paragraphs 4-6 which relate to the transfer of property, rights and liabilities by Schedule 1 transfer schemes
415.Paragraph 4 ensures that a relevant transfer is treated as a no gain/no loss transfer for capital gains purposes.
416.Paragraph 5 provides continuity of treatment for corporation tax purposes in relation to the transfer of loans.
417.Paragraph 6(1) treats a transfer of a chargeable intangible asset as tax neutral for corporation tax purposes. Paragraph 6(2) disapplies transfer pricing rules in relation to the transfer. Paragraph 6(3) prevents an asset created or acquired before 1 April 2002 from becoming a chargeable intangible asset of the transferee.
418.Paragraph 7(1) sets out the circumstances in which paragraph 7(2) applies and paragraph 7(2) prevents degrouping charges arising for the purposes of corporation tax on chargeable gains and stamp duty land tax, as a result of such a disposal.
419.Paragraph 8 ensures that the effect of paragraph 7 will not prevent a degrouping charge arising if Royal Mail Holdings or a subsidiary leaves a new group as a result of a subsequent disposal of securities of Royal Mail Holdings or the subsidiary