CheckLists.Tax (beta)
2. Duty to submit a direct tax return
General
A liquidation demerger typically involves the following steps:
(1) Insertion of a new holding company (optional)
(2) Establish Newcos
(3) Placing Holdco in liquidation
(4) Distribution of assets of Holdco to Newcos in return for issue of shares.
Insertion of a new holding company
This will be necessary where it is undesirable to transfer the trade away from an existing trading company.
See G1: Insertion of a new holding company
Establishing Newcos
Usually no tax consequences.
Income tax for shareholders
Distribution in a winding up
Not treated as an income tax distribution
Legislation: CTA 2010, s.1030
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Capital gains tax for shareholders
See G9: Capital reduction demerger, step 5
Capital gains for Holdco
See G9: Capital reduction demerger, step 5
Degrouping
Capital gains
XX
Legislation:
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Loan relationships
XX
Legislation:
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Intangible fixed assets
XX
Legislation:
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Corporation tax
Transfer of trade
Loss carry forward
Usually tax neutral
Legislation:
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Capital allowances
Usually tax neutral
Legislation:
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Transfer of intangibles
Usually tax neutral
Legislation:
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Stamp duty
Reconstruction: relief available
XX
Legislation: FA 1986, s.75.
Cases:
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Partition: relief not available
- Transferring shares in a subsidiary to Newco in return for Newco issuing shares to Holdco's shareholders is a sale.
- Consideration is deemed to be market value.
Legislation: FA 1986, s.75.
Cases:
HMRC manuals:
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