TCGA 1992 Sch 7AC para 15A of the substantial shareholding exemption (SSE) rules allows divisionalised businesses to sell trading divisions using a hive-down and sale structure. In M Group Holdings, the Upper Tribunal dismissed the taxpayer’s argument that para 15A should apply to a hive-down and sale when the seller did not form part of a chargeable gains group at the time of the trade and asset transfer to the subsidiary. In the author’s opinion, the UT took an overly restrictive view of the provision’s purpose and one which was at odds with the underlying policy intention of the rules, namely to ensure that the tax rules do not distort decision-making for divisionalised businesses. Parliament should therefore amend para 15A to give effect to the original policy rationale of the SSE rules, which remain as valid as ever.
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TCGA 1992 Sch 7AC para 15A of the substantial shareholding exemption (SSE) rules allows divisionalised businesses to sell trading divisions using a hive-down and sale structure. In M Group Holdings, the Upper Tribunal dismissed the taxpayer’s argument that para 15A should apply to a hive-down and sale when the seller did not form part of a chargeable gains group at the time of the trade and asset transfer to the subsidiary. In the author’s opinion, the UT took an overly restrictive view of the provision’s purpose and one which was at odds with the underlying policy intention of the rules, namely to ensure that the tax rules do not distort decision-making for divisionalised businesses. Parliament should therefore amend para 15A to give effect to the original policy rationale of the SSE rules, which remain as valid as ever.
If you are not a subscriber, subscribe now to read this content.
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