Section 267 | Company reconstruction or amalgamation: transfer of assets.

(1)Subject to the provisions of this section, where—^F1

(a)any scheme of reconstruction or amalgamation involves the transfer of the whole or part of a company’s business to another company, and

(b)the transfer takes effect after 5th April 1970, and

(c)at the time of the transfer both the companies are resident in the United Kingdom, and

(d)the first-mentioned company receives no part of the consideration for the transfer (otherwise than by the other company taking over the whole or part of the liabilities of the business),

then so far as relates to corporation tax on chargeable gains the two companies shall be treated as if any assets included in the transfer were acquired by the one company from the other company for a consideration of such amount as would secure that on the disposal by way of transfer neither a gain nor a loss would accrue to the company making the disposal, and for the purposes of Schedule 5 to the Capital Gains Tax Act 1979 (assets held on 6th April 1965) the acquiring company shall be treated as if the respective acquisitions of the assets by the other company had been the acquiring company’s acquisition of them.

(2)This section does not apply in relation to an asset which, until the transfer, formed part of trading stock of a trade carried on by the company making the disposal, or in relation to an asset which is acquired as trading stock for the purposes of a trade carried on by the company acquiring the asset.

(2A)This section does not apply in relation to an asset if the company acquiring it, though resident in the United Kingdom,—^F2

(a)is regarded for the purposes of any double taxation arrangements having effect by virtue of section 788 of the Taxes Act 1988 as resident in a territory outside the United Kingdom, and^F2

(b)by virtue of the arrangements would not be liable in the United Kingdom to tax on a gain arising on a disposal of the asset occurring immediately after the acquisition.^F2

(3)This section does not apply in the case of a transfer of the whole or part of a company’s business to a unit trust scheme to which section 96 . . . of the Capital Gains Tax Act 1979 (unit trusts for exempt unit holders) applies or which is an authorised unit trust within the meaning of section 468 of the Taxes Act 1988 or to an investment trust within the meaning of section 842 of that act.^F1F3F4F5

(3A)This section does not apply unless the reconstruction or amalgamation is effected for bona fide commercial reasons and does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoidance of liability to corporation tax, capital gains tax or income tax; but the foregoing provisions of this subsection shall not affect the operation of this section in any case where, before the transfer, the Board have, on the application of the acquiring company, notified the company that the Board are satisfied that the reconstruction or amalgamation*.will be effected for bona fide commercial reasons and will not form part of any such scheme or arrangements as aforesaid.Subsections (2) to (5) of section 88 of the Capital Gains Tax Act 1979 shall have effect in relation to this subsection as they have effect in relation to subsection (1) of that section.^F6F1

(3B)Where, if the company making the disposal had not been wound up, tax could have been assessed on it by virtue of subsection (3A) above, that tax may be assessed and charged (in the name of the company making the disposal) on the company to which the disposal is made.^F6

(3C)If any tax assessed on a company (the chargeable company) by virtue of subsection (3A) or (3B) above is not paid within six months from the date when it is payable, any other person who—^F6

(a)holds all or any part of the assets in respect of which the tax is charged; and^F6

(b)either is the company to which the disposal was made or has acquired the assets without there having been any subsequent disposal not falling within this section or section 273 below,^F6

may, within two years from the time when the tax became payable, be assessed and charged (in the name of the chargeable company) to all or, as the case may be, a corresponding part of the unpaid tax; and a person paying any amount of tax under this section shall be entitled to recover a sum of that amount from the chargeable company.

(4)In this section—^F5

“scheme of reconstruction or amalgamation” means a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies,

“trading stock” has the meaning given by section 100(2) of the Taxes Act 1988.