IFM40450 - Ceasing to be a QAHC: exiting the regime

FA22/SCH2/PARA31(1) to (3)

New accounting period

For corporation tax purposes, when a company ceases to be a QAHC, the current accounting period ends at the end of the day in which it ceases to be a QAHC. The next accounting period starts at the beginning of the day after the day in which the company ceases to be a QAHC.

Deemed disposal on exit

The following assets held by a company that ceases to be a QAHC will be treated as disposed of immediately before ceasing to be a QAHC and reacquired immediately after:

• any overseas land (IFM40920);
• any loan relationship or derivative contract the company is party to for the purposes of an overseas property business of the company (IFM40820); and
• any qualifying shares (IFM40930).

The deemed consideration for both the sale and reacquisition of the assets must be at market value.

Any gains accruing from the deemed disposals of assets at point of exit will be chargeable in the accounting period that ended the day before exiting the QAHC regime.

Any losses accruing from the deemed disposal of assets at point of exit will crystallise in the accounting period that ended the day before exiting the QAHC regime.

Rules regarding the use of losses arising prior to and after exiting the QAHC regime can be found at IFM40350+.

Gains arising from deemed disposals at time of exit may be exempt from charge under PARA 53 (see IFM40900+).

Care must be taken in determining whether to apply the SSE or the QAHC PARA 53 exemption (IFM40345) as each has their own requirements to be met.