It's good to be associated

06 December 2006 / Pete Miller

Issue: 4087 / Categories: Comment & Analysis , Capital Gains , Companies

PETE MILLER discusses a recent Special Commissioner's decision concerning the tax charge on a company leaving a group.

IN THE CASE of Johnston Publishing (North) Limited v HMRC (SpC 564) the Special Commissioner John Clark considered the associated company test of TCGA 1992 s 179(2). (All references in this article are to TCGA 1992 unless stated otherwise.) His decision in favour of HMRC was that to escape a charge under s 179 the transferee and transferor companies must be associated at the time of the intra-group transfer as well as at the time that both companies leave the group together.

Legislative history

Some of the legislation has changed materially since 1997 and 1998 when the transactions took place. All references are to the legislation in force at that time but I have not reproduced all the legislative words in this article.
Since the inception of capital gains tax and corporation tax in 1965 transfers of assets within a capital...

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