Taxation of Chargeable Gains Act 1992 Schedule 7A paragraph 9

Identification of "the relevant group" and application of Schedule to every connected group

Paragraph 9 of Schedule 7A explains how to identify "the relevant group" when applying the degrouping charge rules, and confirms that where multiple groups are connected, the Schedule applies separately to each group.

• The "relevant group" is the principal company and all its 75% subsidiaries at the time the degrouping event occurs — this is the group from which the company is treated as having left.
• If a company belongs to more than one group simultaneously (because of overlapping group structures), the Schedule applies independently to each such group, and a degrouping charge can arise in respect of each one.
• Where groups are connected with one another, the rules do not merge those groups into a single entity — each group is tested on its own terms for the purposes of determining whether a degrouping charge arises.
• This ensures that a company cannot avoid a degrouping charge simply because it remains a member of a related or connected group after leaving another group.

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