Taxes Consolidation Act 1997 section 308A

Assets transferred in course of scheme of reconstruction or amalgamation

Section 308A provides that trade assets transferred as part of a scheme of reconstruction or amalgamation do not give rise to a balancing allowance or balancing charge, and that capital allowances carry over to the acquiring company.

• A scheme of reconstruction or amalgamation (SRA) means a scheme for the reconstruction of any company or companies, or the amalgamation of two or more companies
• Where a trade is transferred under an SRA between companies resident in the State (or trading here through a branch or agency), and the transferring company receives no consideration other than the acquiring company assuming trade liabilities, the transfer does not trigger a balancing allowance or balancing charge
• The acquiring company steps into the shoes of the transferring company for capital allowances purposes, receiving any unexpired allowances and bearing any future balancing charges as if it had always carried on the trade
• This relief does not apply where section 400 applies, which provides similar relief where a trade transfers between companies under common ownership without a change in at least 75% ownership