Section 169LA: Relevant business assets: goodwill transferred to a close company, Taxation of Chargeable Gains Act 1992

Subject to subsection (1A), subsection (4) applies if—

as part of a qualifying business disposal, a person ("P") disposes of goodwill directly or indirectly to a close company ("C"), and

immediately after the disposal, P meets any of the personal company conditions in the case of C or any company which is a member of a group of companies of which C is a member.

For the purposes of subsection (1)(b)—

the reference to the personal company conditions is a reference to any of the conditions in 169S(3)(a), (b), (c)(i) or (ii), and

P is taken to have all the rights and interests of any relevant connected person.

For the purposes of subsection (1ZA)—

section 169S(3) is treated as having effect with the omission of the references to "by virtue of that holding",

section 169S(3A)(a) and (b) are to apply for the purposes of section 169S(3)(c)(ii) but as if the reference to the final day of the period mentioned in section 169S(3A)(a) were to the time immediately after the disposal, and

the condition in section 169S(3)(c)(i) is to be read as containing two separate conditions (one relating to profits and the other relating to assets).

Where—

subsection (1)(b) applies by virtue of P's ownership, or any relevant connected person's ownership, of C's ordinary share capital, and

the conditions mentioned in subsection (1B) are met,

subsection (4) does not apply.

The conditions referred to in subsection (1A)(b) are—

P and any relevant connected person dispose of C's ordinary share capital to another company ("A") such that, immediately before the end of the relevant period, neither P nor any relevant connected person own any of C's ordinary share capital, and

where A is a close company, immediately before the end of the relevant period—

P and any relevant connected person together own less than 5% of the ordinary share capital of A or of any company which is a member of a group of companies of which A is a member, and

P and any relevant connected person together hold less than 5% of the voting rights in A or in any company which is a member of a group of companies of which A is a member.

In subsection (1B) "the relevant period" means the period of 28 days beginning with the date of the qualifying business disposal, or such longer period as the Commissioners for Her Majesty's Revenue and Customs may by notice allow.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the purposes of this Chapter, the goodwill is not one of the relevant business assets comprised in the qualifying business disposal.

If a company—

is not resident in the United Kingdom, but

would be a close company if it were resident in the United Kingdom,

the company is to be treated as being a close company for the purposes of this section ... .

If a person—

disposes of goodwill as part of a qualifying business disposal, and

is party to relevant avoidance arrangements,

subsection (4) applies (if it would not otherwise do so).

In subsection (6) "relevant avoidance arrangements" means arrangements the main purpose, or one of the main purposes, of which is to secure—

that subsection (4) does not apply in relation to the goodwill, ...

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

In this section—

"arrangements" includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);
"group" is to be construed in accordance with section 170;
"relevant connected person" means—
(a)a company connected with P, and
(b)trustees connected with P.

Section 169LA: Relevant business assets: goodwill transferred to a close company

Discussed in

About this text