CG52803 - Company reconstructions where there is a transfer of business: company: TCGA92 S139: basic conditions

TCGA92/S139

TCGA92/S139 applies where

• a scheme of reconstruction involves the transfer of the whole or part of a company’s business to another company,
• the scheme either

• is a “scheme of reconstruction” within the meaning of Schedule 5AA (see CG52707), if the issue of shares and debentures takes place on or after 17 April 2002, or
• is a “scheme of reconstruction or amalgamation” within the meaning of old TCGA92/139(9) (see CG52831 and CG52730+), if the issue takes place before 17 April 2002

• for disposals before 1 April 2000, at the time of the transfer both companies are resident in the UK, or, for disposals on or after 1 April 2000, the assets remain within the scope of the charge to UK corporation tax
• the transferor company receives no consideration for the transfer except that the transferee company may take over any of the liabilities of its business, see CG52806

TCGA92/S139 does not apply to

• a transfer of certain assets to dual resident companies, see CG52817
• a transfer of trading stock. This should be dealt with under the normal rules for trade profits, Section 139(2)
• a transfer to an exempt unit trust, an authorised unit trust or an approved investment trust, see CG52819.

Guidance on the definition of a scheme of reconstruction are given at CG52707+ with examples at CG52720+. As explained in those paragraphs TCGA92/S139 goes hand in hand with TCGA92/S136. Section 136 applies to the shareholders involved in the scheme of reconstruction and Section 139 to the company. The Clearance and Counteraction Team, contact details at CG52631, deal with statutory clearances and can tell you whether one has been accepted or refused.