Capital Acquisitions Tax Consolidation Act 2003 (Number 1 of 2003)
101 Withdrawal of relief.
[FA 1994 s135]
(1) In this section “relevant period”, in relation to relevant business property comprised in a gift or inheritance, means the period of 6 years commencing on the date of the gift or inheritance.
(2) The reduction which would fall to be made under section 92 in respect of relevant business property comprised in a gift or inheritance shall cease to be applicable if and to the extent that the property, or any property which directly or indirectly replaces it—
(a) would not be relevant business property (apart from section 94 and the conditions attached to paragraphs (d) and (f) of subsection (1) of section 93 and other than by reason of bankruptcy or a bona fide winding-up on grounds of insolvency) in relation to a notional gift of such property taken by the same donee or successor from the same disponer at any time within the relevant period, unless it would be relevant business property (apart from section 94 and the conditions attached to paragraphs (d) and (f) of subsection (1) of section 93) in relation to another such notional gift taken within a year after the first-mentioned notional gift,
(b) is sold, redeemed or compulsorily acquired within the relevant period and is not replaced, within a year of the sale, redemption or compulsory acquisition, by other property (other than quoted shares or securities or unquoted shares or securities to which section 99(2)(b) relates) which would be relevant business property (apart from section 94 and the condition attached to section 93(1)(d)) in relation to a notional gift of that other property taken by the same donee or successor from the same disponer on the date of the replacement,
and tax is chargeable in respect of the gift or inheritance as if the property were not relevant business property, but—
(i) any land, building, machinery or plant which are comprised in the gift or inheritance and which qualify as relevant business property by virtue of section 93(1)(e) shall, together with any similar property which has replaced such property, continue to be relevant business property for the purposes of this section for so long as they are used for the purposes of the business concerned,
(ii) this section shall not have effect where the donee or successor dies before the event which would otherwise cause the reduction to cease to be applicable.
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(3) Notwithstanding subsection (2), where relevant business property (in this section referred to as “original property”) comprised in a gift or inheritance has been replaced directly or indirectly by other property and the market value of the original property is greater than the market value of that other property, then the reduction which would fall to be made under section 92 in respect of the original property shall be reduced in the same proportion as the market value of the other property bears to the market value of the original property.
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(4) (a) In this subsection—
“division’ means a division undertaken in accordance with Chapter 4 of Part 9 of the Companies Act 2014;
“merger” means a merger undertaken in accordance with Chapter 3 of Part 9 of the Companies Act 2014;
“successor company” means a company to which assets have been transferred from a transferor company as a result of a merger or division;
“transferor company” means a company from which assets have been transferred to a successor company or successor companies as a result of a merger or division.
(b) For the purposes of subsection (2)(b), relevant business property shall not be regarded as having been sold where it was transferred from a transferor company to a successor company as a result of a merger or a division.
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