Taxes Consolidation Act 1997 section 625

Shares in subsidiary member of group

Section 625 is an anti-avoidance provision that reinstates a deferred capital gains tax charge where shares in a subsidiary were disposed of as part of a group reconstruction or amalgamation and the subsidiary subsequently leaves the group within ten years.

• Where a subsidiary leaves a group and its shares were previously disposed of by another group company (the chargeable company) as part of a reconstruction or amalgamation within the preceding ten years, the chargeable company is deemed to have sold and reacquired those shares at market value immediately before the earlier disposal
• If the chargeable company has been wound up or dissolved before the subsidiary leaves the group, the resulting corporation tax may be assessed on the principal company of the group
• Unpaid tax may, within two years of the due date, be assessed on the principal company of the group or any company that acquired an interest in the subsidiary as part of the reconstruction or amalgamation, with rights of recovery against the chargeable company
• Assessments may be made at any time within ten years of the subsidiary leaving the group, and all necessary adjustments to earlier assessments must be made accordingly