Taxes Consolidation Act 1997 section 600

Transfer of business to company

Section 600 provides relief from capital gains tax where a person (other than a company) transfers a business as a going concern to a company wholly or partly in exchange for shares in that company.

• Where a person transfers a business as a going concern to a company in exchange for shares, the portion of the gain attributable to the shares is not immediately chargeable to CGT but is instead deferred by reducing the base cost of the shares received.
• The total gain on the transfer is apportioned between the consideration received in shares and any other consideration such as cash or liabilities assumed by the company, and only the portion attributable to the non-share consideration is immediately chargeable.
• Where the transfer is made entirely in exchange for shares and assets exceed liabilities, bona fide trade creditors taken over by the company are not, by concession, treated as consideration for the transfer; however, this concession does not extend to bank loans or tax liabilities.
• The relief is only available where the transfer is made for bona fide commercial reasons and does not form part of any arrangement or scheme the main purpose of which is tax avoidance.