IFM25035 | Real Estate Investment Trust : Capital gains: computational rules: company ceasing to be a member of a group (TCGA1992/S179)

The broad effect of TCGA1992/S179 is to bring back into charge a gain deferred on an earlier no gain/no loss disposal if the asset in question leaves the group otherwise than by a direct disposal of the asset (a de-grouping event). The rules achieve this by a deemed disposal at market value. The company leaving the group, A, makes a deemed disposal and reacquisition of the asset at market value at the beginning of the accounting period in which it leaves the group or, if later, immediately after the time it acquired the asset from another group company. Where the group member, C, disposing of A, is within the charge to Corporation Tax on chargeable gains in respect of the disposal, the amount of any gain (or loss) calculated by reference to the deemed disposal is treated as increasing the consideration received by C on its disposal. However where exemption under CTA2010/S535 is available on the disposal by A then the gain accrues to A (TCGA1992/S179(3A)(c)) For detail on the operation of these provisions, see CG45400+.

There are no extra de-grouping events associated with membership of a Group REIT since the deeming provision in CTA2010/S601 (of the group as far as it carries on a property rental business as a separate group) does not apply to TCGA1992/S179.

Once a de-grouping charge is triggered, its operation can be affected by the fact that CTA2010/S541(3) treats the part of a company carrying on a property rental business as a separate company for the purposes of CT. This may be relevant where, for example, a company engaged in a property rental business leaves a Group REIT. This is covered in the examples at IFM25050.

The examples at IFM25037 illustrate how TCGA1992/S179 will operate in typical situations for a Group REIT.