Group Transfer of Asset & Chargeable Gains

[georgina_85]

I work for a Limited Company in property investment in the UK.

We intend to buy property and transfer it to our parent company as an intra-group transfer. Following s.171 TCGA this would occur on a no gain/no loss basis and no CGT will be due.

What I am wondering is:
(a) Is the CGT merely deferred until the asset is sold outside of the group? (or transferred for use in a Partnership?)
(b) If the vendor company is later liquidated, will this cause a claw back under s.179? Or is this only the case where the recipient company ceases to be part of group?

[georgina_85]

Also, does s.171 TCGA relief for intra=group transfers of assets apply if the recipient company is non-domiciled UK?

[section 44]

the recipient company is non-domiciled UK

Do you mean that the recipient company is not UK resident for tax purposes? If so, then there would be a disposal by the transferee for deemed market value consideration and the transferee would be liable to UK corporation on any profit.

I take it that you assume that the company acquiring the property from a third party would acquire, and then hold, the property as an investment and not as trading stock even though you contemplate it disposing of the property (i.e. would this perhaps be within the scope of tax on income rather than tax on gains?)

[Incredulum]

We intend to buy property and transfer it to our parent company as an intra-group transfer.

Why?

[georgina_85]

The parent company is German and we our the UK facilitating company.

[Incredulum]

In which case, UK Co is probably trading (the intention is that it sources more than one property). And unless the group is small, would be expected to transfer price a profit in. If this is UK property you will have a double SDLT charge.

On this basis you're completely outside TCGA (unless there's more to this than meets the eye).