Capital reduction demerger ― overview

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

A capital reduction demerger is a non-statutory method to carry out a demerger.

The stringent conditions for a statutory demerger and the chargeable payments rule can often make that demerger route unfeasible or undesirable. See the Statutory demergers - overview guidance note for details of these.

Common scenarios where the statutory demerger route may not be suitable or indeed available include where:

•
the company does not have sufficient distributable reserves
•
there are plans to sell the demerged business or businesses
•
the business that is being demerged is not a trading business

In such cases, there are two alternative non-statutory procedures for carrying out the demerger. One is through a reduction in the company’s share capital, known as a demerger by way of a Companies Act reconstruction or a ‘capital reduction demerger’. The second is set out in Insolvency Act 1986, s 110, and is often referred to as a section 110 demerger or a liquidation demerger. This guidance note provides an introduction to capital reduction demergers. For guidance on demergers via

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Popular Articles

Owner-Managed Businesses

Wholly and exclusively

Wholly and exclusivelyFor both income tax and corporation tax purposes, one of the fundamental conditions that must be satisfied for an item of expenditure to be deductible, is that it must incurred ‘wholly and exclusively’ for the purposes of the trade, profession or vocation. References to CTA

14 Jul 2020 14:00 | Produced by Tolley Read more

Class 1 v Class 1A

Class 1 v Class 1AClass 1 and Class 1AClass 1 and Class 1A are the categories of NIC that can be charged on expenses reimbursed and benefits provided to employees. These classes are mutually exclusive. A benefit cannot be subject to both Class 1 and Class 1A NIC. Three requirements must be met

Corporation Tax

Terminal trading loss relief

Terminal trading loss reliefTerminal loss relief for trade losses in the final 12 monthsTrading losses incurred by a company in the final 12 months leading up to the discontinuance of trade may be carried back for up to three years from the period beginning immediately before that 12-month period.

14 Jul 2020 13:49 | Produced by Tolley Read more

��Ӱ��