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Modernisation of Rules for Chargable Gains of Companies

The Government have proposed changes to the taxation of chargeable gains of companies. The proposed changes are:-

1. From 1 April 2000 it will be possible for companies to transfer assets on a no gain/no loss basis in a wider range of circumstances than is possible under the current rules.

2. Companies are presently able to transfer assets from one to another on a no gain/no loss basis when they are members of the same group of UK resident companies. In future, membership of a group will no longer be restricted to UK resident companies. Provided the assets remain within the scope of corporation tax on chargeable gains, no gain/no loss transfers will be possible within the worldwide group of companies.

3. It will be possible to transfer an asset on a no gain/no loss basis between two UK resident companies with a common non-resident parent company. It will also be possible to transfer assets on a no gain/no loss basis between a UK resident company and a non-resident company within the same worldwide group carrying on a trade in the UK through a branch or agency where the asset remains within the charge to corporation tax on chargeable gains.

4. The rules for relieving chargeable gains where there is a scheme of reconstruction or amalgamation of a company&#39s business will also be relaxed. Currently the companies which are party to the scheme must be resident in the UK. In future the relief will focus on whether the assets transferred remain within the scope of corporation tax on chargeable gains, rather than the residence of the companies.

The changes, which reflect the increasing globalisation of businesses, will give companies greater flexibility in how they structure their businesses without incurring tax charges while assets remain within the same overall ownership and within the UK tax net. Together with the changes to corporation tax group relief, (see above), it is thought that these reforms will allow companies to organise themselves to meet their commercial needs.


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