Taxation of Chargeable Gains Act 1992 section 185

Schedule 7AB paragraph 8

Section 185, as modified by Schedule 7AB paragraph 8, deals with the application of the charge on emigration of a company from the United Kingdom in the context of transfers of assets within a corporate group that has elected for the substantial shareholding exemption treatment.

• When a company ceases to be UK-resident, section 185 normally treats it as having disposed of and reacquired its assets at market value, triggering a chargeable gains charge on any latent gains.
• Schedule 7AB paragraph 8 modifies the operation of section 185 where assets have previously been transferred within a group and a Schedule 7AB election is in place, ensuring that deferred or rolled-over gains from intra-group transfers are brought into charge on emigration.
• The amendment introduced by Finance Act 2011, Schedule 10, paragraph 5(c), updated this provision to align it with wider reforms to the substantial shareholding exemption and group transfer rules.
• The practical effect is that companies cannot avoid a chargeable gains liability on built-in gains in transferred assets simply by moving their tax residence outside the UK while a Schedule 7AB election applies.

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