Even though HMRC may have given clearance for a demerger, the demerger may later be exploited for avoidance.
To counter this, the legislation introduces the concept of chargeable payments. Broadly, these are payments of any kind by a company to its members, directly or indirectly, which are money payments or the transfer of money's worth.
However, chargeable payments do not include:
•exempt distributions, or
•payments made for genuine commercial reasons.
CTA10/S1086 deals with payments made within five years of an exempt distribution by:
•any of the companies involved in the demerger, or
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