Taxation of Chargeable Gains Act 1992 section 179

Company ceasing to be member of group: post-appointed day cases

Section 179 deals with the "degrouping charge" — the tax consequences that arise when a company leaves a corporate group within six years of having acquired an asset from another group member on a tax-neutral (no gain/no loss) basis.

• When a company (company A) acquired an asset from a fellow group member on a no gain/no loss basis and then leaves the group within six years, it is deemed to have sold and reacquired that asset at market value immediately after the original acquisition, potentially triggering a chargeable gain or allowable loss
• Where company A leaves the group because of a disposal of its shares by another group member, the degrouping gain or loss is not charged on company A directly but is instead added to (or deducted from) the consideration on the share disposal made by the selling group company
• Special rules protect against an immediate degrouping charge where company A leaves a group solely because the group's principal company is taken over by another group, but a charge can arise later if company A subsequently ceases to qualify as a 75% and effective 51% subsidiary of a member of the acquiring group
• Anti-avoidance provisions track situations where associated companies leave one group and join a connected group under the same control, ensuring the degrouping charge is not permanently avoided through group restructurings