Taxes Consolidation Act 1997 section 649

Companies chargeable to capital gains tax in respect of chargeable gains accruing on relevant disposals

Section 649 provides that companies are chargeable to capital gains tax (CGT) rather than corporation tax on gains arising from disposals of development land, and sets out rules for how such disposals are treated within groups of companies.

• Gains accruing to a company on disposals of development land are charged to CGT, not corporation tax, and the company must comply with CGT payment and filing obligations accordingly.
• The group relief provisions in sections 617 and 621 to 626 (covering intra-group transfers, depreciatory transactions, dividend stripping, companies leaving groups, merger exemptions, subsidiary shares, and recovery of tax from group members) apply to CGT on development land gains as they apply to corporation tax on chargeable gains.
• Where a company disposes of development land that it acquired from another group member as a non-development-land asset, the chargeable gain is computed as if all group members were a single person, so that the base cost is the cost to the group as a whole.
• Where a later deemed acquisition date applies under section 618(2) (trading stock transfers within a group) or section 623 (company ceasing to be a group member), that later date is used as the start of the period of ownership, preventing an excessive gain from being attributed to the disposing company.