623A Transitional provisions in respect of section 623

Summary

The current definition of what constitutes a group (section 616(1)) was introduced in the Finance Act, 1999. This section ensures that a company which ceases to be a member of a group solely as a result of this change in definition is not immediately exposed to a tax charge under section 623. However, that tax charge could arise at a later date. For this tax charge to arise the company must leave the group according to the definition of group as it existed prior to the Finance Act, 1999.

Details

Definitions

(1) The “new definition” and the “old definition” mean, respectively, the definitions of what constituted a group after and before the changes introduced in the Finance Act, 1999.

Deferred gains do not crystallise immediately solely because of change of definition of group

(2) If the change of definition of what constitutes a member of a group (which took effect on 11 February, 1999) caused —

• a company to cease to be a member of a group, and
• the triggering of a tax liability in respect of an asset under section 623,

then that tax liability does not arise until certain conditions are satisfied.

(3) These conditions are —

• the company subsequently ceases to be a member of a group as previously defined,
• that at that time the company or an associated company (i.e. a company which together with the first mentioned company form a group under the old definition) own the asset or a replacement, and
• the asset was acquired less than 10 years before that time.

Relevant Date: Finance Act 2021