What triggers the reinstatement of a deferred gain under section 829 of the Corporation Tax Act 2009?

Two events trigger reinstatement. First, the transferor realising all or part of the securities it received in the transferee company. Second, the transferee disposing of all or some of the transferred intangible fixed assets within 6 years of the original transfer. Both events require the transferor to bring a taxable credit into account.

How is the proportionate taxable credit calculated when the transferor disposes of only part of its securities?

The taxable credit is calculated by comparing the market value of the securities disposed of to the market value of all securities held immediately before the disposal. That proportion is then applied to the total remaining deferred gain — being the sum of amounts by which proceeds were reduced under section 828 that have not already been brought back into charge.

Is there a time limit on when disposals trigger a charge under section 829?

A 6-year time limit applies only to disposals of transferred intangible assets by the transferee. If the transferee disposes of assets after 6 years from the original transfer, no charge arises under section 829. However, there is no equivalent time limit on the transferor's disposal of its securities, which can trigger a charge at any time.

Are intra-group transfers excluded from triggering a charge under section 829?

Yes. Section 830 of the Corporation Tax Act 2009 provides that certain intra-group transfers are disregarded for the purposes of section 829. This means that qualifying group transfers of the securities by the transferor or of the intangible assets by the transferee will not trigger the reinstatement of the deferred gain.

Corporation Tax Act 2009 section 829

Charge on subsequent realisations

Section 829 provides for the whole or partial reinstatement of a tax charge that was previously deferred under the transfer of business relief rules, triggered when the transferor disposes of the securities it received or the transferee disposes of the transferred intangible assets.

When the transferor realises all or part of the securities received on the transfer, it must bring a taxable credit into account equal to all or a proportionate share of the total deferred gain
The proportion is based on the market value of the securities realised compared to the market value of all securities held immediately before the realisation
If the transferee realises all or some of the transferred intangible assets within 6 years of the original transfer, the transferor must similarly bring a taxable credit into account for all or a proportionate share of the total deferred gain
Certain group transfers may be disregarded for these purposes under separate rules in section 830

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