Corporation Tax Act 2009 section 831

The genuine commercial transaction requirement and clearance

Section 831 sets out the conditions that a reconstruction, transfer or merger must satisfy to be treated as a genuine commercial transaction, and provides an advance clearance procedure to give certainty before the transaction takes place.

• A reconstruction, transfer or merger meets the genuine commercial transaction requirement if it is carried out for genuine commercial reasons and is not part of arrangements whose main purpose (or one of whose main purposes) is the avoidance of corporation tax, capital gains tax or income tax.
• The conditions are automatically treated as met if, before the transaction, the appropriate applicant has applied to HMRC and HMRC have confirmed they are satisfied the requirements will be met.
• The identity of the appropriate applicant depends on the type of transaction: it may be the transferee, the transferor, or both, depending on whether the transaction is a company reconstruction, a European cross-border transfer of business, a European cross-border merger, or a transfer where a claim to postpone a charge applies.
• The detailed procedure for making a clearance application is set out separately in section 832.