What does 'relevant company' mean under section 1080 of the Corporation Tax Act 2010?

Section 1080 defines which companies are treated as 'relevant companies' for demerger relief purposes. The identity of these companies depends on the type of demerger distribution involved. All relevant companies must satisfy the various conditions imposed elsewhere in the demerger provisions for the relief to be available under United Kingdom law.

Which companies are relevant in a direct share transfer demerger?

In a direct share transfer demerger, the relevant companies are the distributing company itself and each subsidiary whose shares are being transferred directly to the distributing company's members. This is the simplest form of demerger, and all identified relevant companies must meet the statutory conditions for relief to apply.

Who are the relevant companies when a transferee company is involved in a demerger?

Where a distributing company transfers a trade or subsidiary shares to a transferee company, which then issues its own shares to the distributing company's members, the relevant companies are the distributing company, each transferee company, and each subsidiary whose shares are transferred to the transferee company.

How does section 1080 apply to cross-border demergers involving a division of business?

In a cross-border demerger involving a division of business, the relevant companies under section 1080 are the distributing company and each transferee company that receives part of the business being divided. All these companies must satisfy the demerger conditions for the relief to be available under United Kingdom corporation tax law.

Corporation Tax Act 2010 section 1080

Meaning of "relevant company"

Section 1080 defines which companies are treated as "relevant companies" for the purposes of the demerger provisions, depending on the type of demerger distribution involved.

In a direct share transfer demerger, the relevant companies are the distributing company and each subsidiary whose shares are transferred to members.
In a demerger where the distributing company transfers a trade or subsidiary shares to a transferee company which then issues shares to the distributing company's members, the relevant companies are the distributing company, each transferee company, and each subsidiary whose shares are transferred.
In a cross-border demerger involving a division of business, the relevant companies are the distributing company and each transferee company receiving the transferred business.
The identity of the relevant companies matters because certain conditions and requirements elsewhere in the demerger rules must be met by all relevant companies for the demerger relief to apply.

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