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A property holding subsidiary – which is accepted to be non-trading – is to be demerged from a trading group. The demerger will take place by way of the capital reduction demerger route being a scheme within TCGA 1992 Sch 5AA. This property-owning subsidiary has received assets by way of inter-group transfers in the previous six years and should in theory be liable for a degrouping charge.
Our research has shown that had the company been trading the substantial shareholding exemption would have applied to ensure that the degrouping charge did not in fact crystallise. However the substantial shareholding exemption is not available in these particular circumstances.
Our query is whether the degrouping charge will apply in this case. In effect will it take precedence over any relief that would be available under TCGA 1992 s 139.
Further if the degrouping charge does...
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