Taxes Consolidation Act 1997 section 625A

Transitional provisions in respect of section 625

Section 625A ensures that the change in the definition of a chargeable gains group introduced by the Finance Act 1999 does not, of itself, trigger a deemed disposal of shares under the degrouping charge in section 625.

• Where a company ceases to be a group member solely because of the updated group definition (section 616 as amended), any deemed disposal that would otherwise arise under section 625(2) is postponed.
• The deemed disposal is deferred until the subsidiary actually leaves the group under the old definition of a group (i.e. the definition as it stood on 10 February 1999).
• Even then, the charge only arises if the original share-for-share exchange took place within the 10-year period ending on the date the subsidiary leaves the group under the old definition.
• The effect is to prevent the mere substitution of a broader group definition from crystallising deferred capital gains within a group.