Corporation Tax Act 2009 section 786

Character of credits and debits brought into account as a result of section 785

Section 786 determines how credits and debits arising from a degrouping charge under section 785 are classified — as trading or non-trading — for the purposes of giving them effect.

• Credits or debits triggered by a degrouping event normally 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 undertaking at the time of the transfer, and that activity has since ceased, the normal characterisation rule does not apply.
• Where the transferee ceased carrying on the relevant trade or business before the degrouping condition was triggered, the resulting credit or debit is treated as non-trading.
• The terms "the transferee" and "the relevant asset" have the same meanings as defined for the deemed market value realisation and reacquisition rules in section 780.