Corporation Tax Act 2009 section 345

Transferee leaving group otherwise than because of exempt distribution

Section 345 deals with what happens to a loan relationship asset or liability when a company that received it leaves a corporate group, and the departure is not the result of an exempt distribution (such as a demerger).

• When a company (the transferee) leaves a corporate group, a degrouping charge may arise on any loan relationship asset or liability it holds
• The degrouping rule does not apply if the company leaves the group solely because of an exempt distribution under section 1075 of CTA 2010, which is designed to facilitate demergers
• Where the rule does apply, the company is treated as having disposed of the loan relationship asset or liability at fair value immediately before leaving the group, and then reacquired it at the same fair value
• Any resulting credit or debit from this deemed disposal and reacquisition must be brought into account for corporation tax purposes