Revenue Note for Guidance

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Revenue Note for Guidance

625A Transitional provisions in respect of section 625

Summary

This section ensures that when a company ceases to be a member of a group by virtue solely of the change in definition of a group (section 616(1)), introduced in the Finance Act, 1999, any charge which might be levied on another group company under section 625 is postponed until the company leaves under the group definition, as it existed previously.

Details

Definitions

(1) The “subsidiary” and the “chargeable company” have the same meanings as in section 625(1).

The “new definition” and the “old definition” mean, respectively, the definitions of what constituted a group after and before the changes introduced in the Finance Act, 1999.

Deferred gains do not crystallise immediately solely because of change of definition of group

(2) If the change in definition of what constitutes a member of a group, which took effect on 11 February, 1999, caused —

  • a company to cease to be a member of a group, and
  • a tax liability to accrue to another group company in respect of the sale of shares under section 625,

Then that tax liability does not arise until certain conditions are satisfied.

(3) These conditions are —

  • the company subsequently ceases to be a member of a group as previously defined, and
  • the disposal of shares during the amalgamation or reconstruction took place less than 10 years before that time.

Relevant Date: Finance Act 2019