Taxation of Chargeable Gains Act 1992 section 140

Postponement of charge on transfer of assets to non-resident company

Section 140 allows a UK resident company to defer capital gains tax when it transfers an overseas trade carried on through a permanent establishment to a non-resident company, provided certain conditions are met and a claim is made.

• A UK company transferring its overseas permanent establishment trade and assets to a non-resident company in exchange for at least 25% of the transferee's ordinary share capital may claim to defer any net chargeable gain arising on the transfer.
• The deferred gain is brought back into charge if the transferor later disposes of the shares or loan stock received as consideration, or if the transferee disposes of the transferred assets within six years, with the amount charged calculated proportionally based on market values.
• Intra-group disposals at no gain/no loss are disregarded for the purposes of triggering a charge, and transfers forming part of qualifying business transfers or mergers under sections 140A, 140C, or 140E are also disregarded.
• From 6 January 2010, a deferred gain brought into charge on disposal of the securities is treated as a separate chargeable gain arising in addition to any actual gain or loss on that disposal, preventing deferred gains from being lost where the consideration includes qualifying corporate bonds.