Taxes Consolidation Act 1997 Schedule 16, paragraph 3

Capital gains: assets vested in the successor company, etc

Paragraph 3 provides that the conversion of a building society into a successor company is not treated as a disposal or acquisition of assets for capital gains tax purposes, and that the successor company steps into the shoes of the society for all capital gains tax matters.

• The conversion of a building society into a successor company is not treated as a disposal by the society, nor as an acquisition by the successor company, of any assets that vest in the successor company on conversion.
• For capital gains tax and corporation tax on chargeable gains, the successor company is treated as having acquired the assets at the same time and for the same consideration as the society originally acquired them.
• The successor company is treated as having been in existence as a company at all times since the society was first incorporated, and as having done all things done by the society in relation to those assets.
• This ensures that unrelieved capital losses carry forward and that capital gains deferred under the replacement of business assets provisions do not crystallise on the conversion.