Corporation Tax Act 2010 section 1074

Purpose of provisions about demergers

Section 1074 explains the purpose of the demerger provisions and identifies which legislative provisions fall within that term.

• The demerger provisions are designed to facilitate transactions where trading activities carried on by a single company or group are split so they are carried on by two or more separate companies or independent groups.
• The term "the provisions about demergers" covers most of Chapter 5 of Part 23, but excludes section 1078 (division of business in a cross-border transfer) and the parts of section 1075 that relate to section 1078.
• The term also explicitly includes section 1028, which deals with chargeable payments connected with exempt distributions not being treated as repayments of share capital.
• The overall aim is to remove tax obstacles that might otherwise discourage genuine commercial reorganisations where business activities are separated into distinct ownership structures.