Section 1081 — Corporation Tax Act 2010: General conditions

General conditions 1081 1 Condition A is that each relevant company must be UK resident or resident in a member State at the time of the distribution.

2 Condition B is that at the time of the distribution—

a the distributing company must be either a trading company or a member of a trading group, and b each subsidiary whose shares are transferred as mentioned in section 1076(a) or 1077(1)(a)(ii) must be either a trading company or the holding company of a trading group.

3 Condition C is that the distribution must be made wholly or mainly for the purpose of benefiting some or all of the trading activities which—

a before the distribution are carried on by a single company or group, and b after the distribution will be carried on by two or more companies or groups.

4 Condition D is that the distribution must not form part of a scheme or arrangement to which subsection (5) applies.

5 This subsection applies to any scheme or arrangement the main purpose or one of the main purposes of which is—

a the avoidance of tax, b the making of a chargeable payment (see section 1088),

c the making, in pursuance of a scheme or arrangements with a company (“A”) or with any of its main participators, of what would be a chargeable payment if A were an unquoted company, d the acquisition by any person or persons, other than the members of the distributing company, of control of—

i the distributing company, ii any other relevant company, or iii any company which belongs to the same group as the distributing company or any other relevant company, e the cessation of a trade after the distribution, or f the sale of a trade after the distribution.

6 Subsections (5)(b) and (c) are without prejudice to the width of subsection (5)(a).

7 In subsection (5)— “ group ” means a company which has one or more 51% subsidiaries together with those subsidiaries, “ main participators ” has the meaning given by section 1089(1)(b), and “ tax ” includes stamp duty and stamp duty land tax.