Taxes Consolidation Act 1997 section 624

Exemption from charge under section 623 in case of certain mergers

Section 624 disapplies the deemed disposal rules under section 623 where a company leaves a group as part of a genuine commercial merger, and sets out the conditions that must be met for an arrangement to qualify as a merger for this purpose.

• Section 623 does not apply where a company leaves a group as part of a merger carried out for bona fide commercial reasons and not mainly to avoid tax.
• A merger involves the acquiring company obtaining an interest in the departing company's business and the departing company's group obtaining a corresponding interest in the acquiring company's business, with at least 25 per cent of each interest consisting of ordinary shares.
• The values of the interests exchanged must be substantially the same, and the consideration received by the departing company's group must be used to acquire its stake in the acquiring company.
• References to a company in this section include a company not resident in an EU or EEA Member State.