4 Section 132, Finance Act 1988
4.1 This section deals with unpaid corporation tax in respect of migrating companies, that is companies which cease to be resident in the United Kingdom. The period at risk in Section 132 is the 12 months ending with the date when the Company ceases to be resident in the United Kingdom (Section 132(6), FA 1988). 4.2 There are two classes of entities caught by this section: firstly any company which was in the same group as the migrating company in the 12 months up to the point of migration is within charge; secondly any person who was a director of the migrating company in this same period and had control of it is also subject to the charge (Section 132(3), FA 1988).
4.3 Section 132 enables HMRC to recover the unpaid corporation tax from either the group member or the controlling director referred to in paragraph 5.2 above.
4.4 It is therefore possible for a corporate or individual Seller to find himself within the charge to Section 132 if the Buyer arranges for the migration of the Company within 12 months of Completion, leaving corporation tax unpaid.
4.5 Under Section 132(4) any person who pays tax under Section 132 may recover any such amount paid by him from the migrating company.
5Section 139, TCGA 1992
5.1 This section deals with reconstructions involving a transfer of a business from one company to another. As an example, certain types of demerger involve the use of this section. 5.2 The section is generally an enabling section: it allows for the transfers of assets to be made without a chargeable gain arising, provided that the reconstruction is being carried out for bona fide commercial reasons and does not have, as its main purpose, the avoidance of tax. 5.3 Tax on chargeable gains therefore arises under this section when the conditions within it are not met. This arises, broadly speaking, if any of the companies involved are not resident in the United Kingdom, or if the reconstruction is not carried out for bona fide commercial reasons. 5.4 Section 139(7), TCGA, provides a circumstance when the Seller may be liable for tax: if the transaction is not protected by the exemption in this Section, the tax on chargeable gains would normally be payable by the transferring company. However, if the tax is not paid by the transferring company, the tax can be charged to any of the companies who received the assets in question. They may either receive the assets directly, or indirectly as part of an intra-group transfer.
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