Corporation Tax Act 2009 section 781

Character of credits and debits brought into account as a result of section 780

Section 781 determines how credits and debits arising from a deemed realisation and reacquisition under section 780 are characterised for tax purposes — specifically whether they are treated as trading or non-trading amounts.

• Credits and debits triggered by the section 780 degrouping charge take their character from the purpose for which the transferee held the asset immediately after the original intra-group transfer.
• If the asset was held for a trade, property business or similar qualifying concern, the credits or debits would normally follow that trading character.
• However, where the transferee held the asset for a trade or qualifying business but ceased that activity before leaving the group, the credits or debits are instead treated as non-trading amounts.
• This non-trading treatment ensures that credits and debits are not attributed to a trade or business that the transferee is no longer carrying on at the point the degrouping charge arises.