Section 145.
1Paragraphs 2 to 7 below apply where there is a transfer of the whole of a building society’s business to a company (“the successor company”) in accordance with section 97 and the other applicable provisions of the [1986 c. 53.] Building Societies Act 1986.
2(1)For the purposes of section 100(1) of the Taxes Act 1988 (valuation of trading stock on discontinuance of trade) the society’s financial trading stock shall be valued at an amount equal to its cost to the society.
(2)In computing for any corporation tax purpose the profits or gains of a trade carried on by the successor company, such of the assets comprised in the transfer as constituted the society’s financial trading stock shall be regarded as acquired by the company at their cost to the society.
(3)In this paragraph “financial trading stock”, in relation to a building society, means such of the assets held by the society by virtue of regulations under section 21(7) of the Building Societies Act 1986 (liquid assets etc.) as constitute trading stock for the purposes of section 100 of the Taxes Act 1988.
3(1)For the purposes of the allowances and charges provided for by the [1968 c. 3.] Capital Allowances Act 1968 and by Part III of the [1971 c. 68.] Finance Act 1971 (capital allowances) the trade of the society shall not be treated as permanently discontinued and the trade of the successor company shall not be treated as a new trade set up and commenced by the successor company.
(2)There shall be made to or on the successor company in accordance with those Acts all such allowances and charges as would, if the society had continued to carry on the trade, have fallen to be made to or on it, and the amount of any such allowance or charge shall be computed as if the successor company had been carrying on the trade since the society began to do so and as if everything done to or by the society had been done to or by the successor company.
(3)No transfer of assets from the society to the successor company effected by section 97 of the Building Societies Act 1986 shall be treated as giving rise to any such allowance or charge.
4(1)Where the society and the successor company are not members of the same group at the time of the transfer—
(a)they shall be treated for the purposes of corporation tax on capital gains as if any asset disposed of as part of the transfer were acquired by the successor company for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the society, and
(b)if because of the transfer any company ceases to be a member of the same group as the society, that event shall not cause section 278 of the Taxes Act 1970 (which treats a company ceasing to be a member of a group as having sold and reacquired at the time of acquisition assets acquired from another member of the group) to have effect as respects any asset acquired by the company from the society or any other member of the same group.
(2)Where the society and the successor company are members of the same group at the time of the transfer but later cease to be so, that later event shall not cause section 278 to have effect as respects—
(a)any asset acquired by the successor company on or before the transfer from the society or any other member of the same group, or
(b)any asset acquired from the society or any other member of the same group by any company other than the successor company which is a member of the same group at the time of the transfer.
(3)Subject to sub-paragraph (5) below, where a company which is a member of the same group as the society at the time of the transfer—
(a)ceases to be a member of that group and becomes a member of the same group as the successor company, and
(b)subsequently ceases to be a member of that group,
section 278 shall have effect on that later event as respects any relevant asset acquired by the company otherwise than from the successor company as if it had been acquired from the successor company.
(4)In sub-paragraph (3) above “relevant asset” means any asset acquired by the company—
(a)from the society, or
(b)from any other company which is a member of the same group at the time of the transfer,
when the company and the society, or the company, the society and the other company, were members of the same group.
(5)Sub-paragraph (3) above shall not apply if the company which acquired the asset and the company from which it was acquired (one being a 75 per cent. subsidiary of the other) cease simultaneously to be members of the same group as the successor company but continue to be members of the same group as one another.
(6)For the purposes of this paragraph “group” shall be construed in accordance with section 272 of the Taxes Act 1970.
5(1)Where, in connection with the transfer, there are conferred on members of the society—
(a)any rights to acquire shares in the successor company in priority to other persons, or
(b)any rights to acquire shares in that company for consideration of an amount or value lower than the market value of the shares, or
(c)any rights to free shares in that company,
any such right so conferred on a member shall be regarded for the purposes of capital gains tax as an option (within the meaning of section 137 of the [1979 c. 14.] Capital Gains Tax Act 1979) granted to, and acquired by, him for no consideration and having no value at the time of that grant and acquisition.
(2)Where, in connection with the transfer, shares in the successor company are issued by that company, or disposed of by the society, to a member of the society, those shares shall be regarded for the purposes of capital gains tax—
(a)as acquired by the member for a consideration of an amount or value equal to the amount or value of any new consideration given by him for the shares (or, if no new consideration is given, as acquired for no consideration); and
(b)as having, at the time of their acquisition by the member, a value equal to the amount or value of the new consideration so given (or, if no new consideration is given, as having no value);
but this sub-paragraph is without prejudice to the operation of sub-paragraph (1) above, where applicable.
(3)Sub-paragraph (4) below applies in any case where—
(a)in connection with the transfer, shares in the successor company are issued by that company, or disposed of by the society, to trustees on terms which provide for the transfer of those shares to members of the society for no new consideration; and
(b)the circumstances are such that in the hands of the trustees the shares constitute settled property, within the meaning of the Capital Gains Tax Act 1979.
(4)Where this sub-paragraph applies, then, for the purposes of capital gains tax—
(a)the shares shall be regarded as acquired by the trustees for no consideration;
(b)the interest of any member in the settled property constituted by the shares shall be regarded as acquired by him for no consideration and as having no value at the time of its acquisition;
(c)where a member becomes absolutely entitled as against the trustees to any of the settled property, both the trustees and the member shall be treated as if, on his becoming so entitled, the shares in question had been disposed of and immediately reacquired by the trustees, in their capacity as trustees within section 46(1) of the Capital Gains Tax Act 1979, for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss would accrue to the trustees (and accordingly section 54 of that Act shall not apply in relation to that occasion); and
(d)on the disposal by a member of an interest in the settled property, other than the disposal treated as occurring for the purposes of paragraph (c) above, any gain accruing shall be a chargeable gain (and accordingly section 58(1) of the Capital Gains Tax Act 1979 shall not apply in relation to the disposal).
(5)Where, in connection with the transfer, the society disposes of any shares in the successor company, then, for the purposes of the Capital Gains Tax Act 1979, any gains arising on the disposal shall not be chargeable gains.
(6)In this paragraph—
“free shares”, in relation to a member of the society, means any shares issued by the successor company, or disposed of by the society, to that member in connection with the transfer but for no new consideration;
“member”, in relation to the society, means a person who is or has been a member of it, in that capacity, and any reference to a member includes a reference to a member of any particular class or description;
“new consideration” means consideration other than—
consideration provided directly or indirectly out of the assets of the society; or
consideration derived from a member’s shares or other rights in the society.
(7)References in this paragraph to the case where a member becomes absolutely entitled to settled property as against the trustees shall be taken to include references to the case where he would become so entitled but for being an infant or otherwise under disability.
6(1)Where, in connection with the transfer, qualifying benefits are conferred by the society or the successor company on members of the society, the conferring of those benefits shall not be regarded as either—
(a)the making of a distribution, within the meaning of the Corporation Tax Acts; or
(b)the payment or crediting of a dividend for the purposes of section 476 of the Taxes Act 1988 or any regulations under that section (building society interest etc.).
(2)Sub-paragraph (1) above does not preclude any qualifying benefit (and, in particular, any qualifying benefit which in the hands of the recipient would, apart from that sub-paragraph, constitute income for the purposes of income tax) from being a capital distribution for the purposes of section 72 of the [1979 c. 14.] Capital Gains Tax Act 1979, and in that section “distribution” shall be construed accordingly.
(3)In this paragraph “qualifying benefits” means—
(a)any such rights as are mentioned in paragraph 5(1)(a), (b) or (c) above, and any property obtained by the exercise of those rights;
(b)any shares issued or disposed of as mentioned in paragraph 5(2) above;
(c)any shares issued or disposed of, or to which a member becomes entitled, as mentioned in paragraph 5(3) or (4) above, and any interest in the settled property constituted by those shares;
(d)any payment in lieu of a qualifying benefit falling within paragraphs (a) to (c) above;
(e)any distribution made in pursuance of section 100(2)(b) of the [1986 c. 53.] Building Societies Act 1986.
(4)“Member” has the same meaning in this paragraph as in paragraph 5 above.
7The following provisions, namely—
(a)section 326 of the Taxes Act 1988 (certain sums to be disregarded for income tax purposes), and
(b)section 149B(4) of the Capital Gains Tax Act 1979 (corresponding provision for capital gains tax purposes),
shall have effect in relation to any terminal bonus, or interest or other sum, payable after the transfer under a savings scheme which immediately before the transfer was a certified contractual savings scheme (within the meaning of section 326) in relation to the society notwithstanding that it ceased to be such a scheme by reason of the transfer.
8Section 109 of the [1986 c. 53.] Building Societies Act 1986 (exemption from stamp duty) shall be renumbered as subsection (1) of that section and after that provision as so renumbered there shall be inserted—
“(2)No transfer effected by subsection (6) or (7) of section 97 shall give rise to any liability to stamp duty.”