Corporation Tax Act 2010 section 1084

Cases where condition K does not apply

Section 1084 sets out the circumstances in which condition K (one of the conditions for a demerger distribution to qualify for tax relief under section 1083) does not need to be satisfied.

• Condition K does not need to be met if the distributing company is a 75% subsidiary of another company.
• Condition K also does not need to be met where there are two or more transferee companies, each receiving either a trade or shares in a separate 75% subsidiary of the distributing company.
• In the case of multiple transferee companies, the distributing company must be dissolved after the distribution without any remaining net assets available for distribution, whether on a winding up or otherwise.
• Both exceptions allow qualifying demerger treatment even though the distributing company has not satisfied condition K.