Statutory demergers provide a relatively quick and simple method of separating a company’s activities. They allow business owners the flexibility to separate their trading activities without crystallising a dry tax charge and avoid the cost of more complex demerger alternatives. There are ‘direct’ and ‘indirect’ statutory demergers, with strict conditions which mean that they will not be appropriate in some circumstances. They rely on specific provisions of CTA 2010 to effect an ‘exempt distribution’ in the hands of shareholders. Advance statutory clearance can be requested. The distributing company must make a return to HMRC within 30 days of making the distribution.
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Statutory demergers provide a relatively quick and simple method of separating a company’s activities. They allow business owners the flexibility to separate their trading activities without crystallising a dry tax charge and avoid the cost of more complex demerger alternatives. There are ‘direct’ and ‘indirect’ statutory demergers, with strict conditions which mean that they will not be appropriate in some circumstances. They rely on specific provisions of CTA 2010 to effect an ‘exempt distribution’ in the hands of shareholders. Advance statutory clearance can be requested. The distributing company must make a return to HMRC within 30 days of making the distribution.
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