Sometimes businesses grouped together under a single company umbrella could be run more effectively if they were allowed to pursue their own interests under independent management and ownership.

The tax system inhibits the splitting up of businesses in this way as such a split will normally involve a distribution under CTA10/S1000.

The demerger provisions in CTA10/PART23/CHAPTER5 aim to make it easier to divide and put into separate corporate ownership the trading activities of a company or group of companies. The provisions do not apply where a trading activity is to be sold or becomes owned by a person other than the existing member of the original company.

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