Taxation of Chargeable Gains Act 1992 section 185

Deemed disposal of assets on company ceasing to be resident in U.K.

Section 185 imposes an exit charge on companies that cease to be UK resident, by deeming them to have disposed of and reacquired all their assets at market value immediately before departure, subject to exceptions for assets that remain within the charge to UK tax through a permanent establishment.

• When a company ceases to be UK resident, it is treated as having sold and immediately repurchased all its assets at market value, triggering a charge to corporation tax on any unrealised gains (the "exit charge").
• Roll-over relief under section 152 is blocked where the old assets were disposed of before the company left the UK and the replacement assets are acquired afterwards, unless those new assets fall within the permanent establishment exception.
• Assets situated in the UK that continue to be used for a trade carried on through a UK permanent establishment are excluded from the deemed disposal, because they remain within the charge to UK corporation tax in any event.
• For overseas life insurance companies carrying on long-term business, the permanent establishment exception applies to relevant assets regardless of whether those assets are situated in the UK.

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