Two amendments to the provisions in the Finance Bill have been tabled that will revise the scope of the alternative collection rights that can be used where a company has not paid tax owed on a capital gain.

The revisions will ensure the new provisions are more closely aligned with current provisions. The decision to make the changes follows consultation with representations from business and other interested parties.


1. From 1 April 2000 it will be possible for companies to transfer assets on a no gain/no loss basis in a wider range of circumstances than is possible under the current rules.

2. Companies are presently able to transfer assets from one to another on a no gain/no loss basis when they are members of the same group of UK resident companies. In future, membership of a group will no longer be restricted to UK resident companies. Provided the assets remain within the scope of corporation tax on capital gains, no gain/no loss transfers will be possible within the worldwide group of companies.

3. Under current legislation there are alternative collection rights where a company does not pay the corporation tax due on capital gains. Section 190 Taxation of Chargeable Gains Act 1992 (TCGA) deals with groups of companies and imposes collection rights on either the principal company of the group at the time the gain accrues, or any other company that had owned the asset in the previous 2 years. Section 191 TCGA deals with non resident companies and provides for a charge on any other company in the group, or a controlling director of the company which has not paid the tax, or of any company that controlled that company. The rules are a necessary safeguard because it would be relatively straightforward to maroon a charge in a company that cannot pay the tax.

4. Paragraph 9 of Schedule 29 of the Finance Bill consolidates (into a new section 190 TCGA) the rules for groups of companies and aims to reflect the wider definition of a group of companies which can include non-resident companies. There have been representations that the combined section goes too far. The amendments now proposed revise the new section so that it is more closely aligned with the current provisions.

5. A further small consequential amendment is necessary to provide a definition of principal company.


1. Finance Bill 2000 will introduce changes that modernise how the capital gains of groups of companies and non resident companies trading in the UK are dealt with.

2. It is part of the Government’s programme to make the UK a more competitive environment for entrepreneurs, investors in business, and businesses themselves.

3. These changes to the rules for group relief and chargeable gains will give companies more freedom to structure in ways that suit their business rather than in ways driven by the tax system. Along with the changes to group relief announced in the Budget, the reviews announced on intangible property and deferral relief on shares, these changes will contribute to the drive to ensure the UK is a good location to do business in and from.

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