IFM40410 - Ceasing to be a QAHC: introduction

FA2022/SCH2/PT3

Exiting the QAHC regime

A company may exit the QAHC regime:

• voluntarily, or
• where a breach of eligibility criteria has occurred (IFM40420).

If a QAHC has unintentionally breached either the activity condition (IFM40255) or the ownership condition (IFM40210), the company can remain in the regime if it can cure the breach (IFM40430).

If a QAHC has breached the ownership condition at the point in which its business is winding down, it may be granted a two-year grace period in which to cease its ringfence business (IFM40440).

There are a number of different exit scenarios – further guidance can be found at IFM41270+. To submit an exit notification, see https://www.gov.uk/guidance/make-a-qualifying-asset-holding-company-qahc-notification-to-hmrc

Tax consequences of exiting the QAHC regime

The QAHC regime modifies existing tax rules, for example, exempting gains on disposals of certain shares that would otherwise be chargeable to tax. It is, therefore, necessary to separate the accounting periods in which a company is and is not a QAHC.

In order to achieve this separation, when a company ceases to be a QAHC there are rules (IFM40450) which:

• require the cessation of the current accounting period;
• deem certain assets as sold and reacquired at market value; and
• adjust the substantial shareholding exemption (SSE) rules in respect of accrued gains.

There are similar rules to consider at the point in which a company becomes a QAHC (IFM40330) or where assets have been transferred to or from a group company (IFM40370+).