Section 123 Roll-over relief on transfer of business.C4C1
United Kingdom
This section shall apply for the purposes of this Act where a person who is not a company transfers to a company a business as a going concern, together with the whole assets of the business, or together with the whole of those assets other than cash, and the business is so transferred wholly or partly in exchange for shares issued by the company to the person transferring the business.
Any shares so received by the transferor in exchange for the business are referred to below as “the new assets”.
The amount determined under subsection (4) below shall be deducted from the aggregate (referred to below as “the amount of the gain on the old assets”) of the chargeable gains less allowable losses.
For the purpose of computing any chargeable gain accruing on the disposal of any new asset—
the amount determined under subsection (4) below shall be apportioned between the new assets as a whole, and
the sums allowable as a deduction under section 32(1)(a) above shall be reduced by the amount apportioned to the new asset under paragraph (a) above;
and if the shares which comprise the new assets are not all of the same class, the apportionment between the shares under paragraph (a) above shall be in accordance with their market values at the time they were acquired by the transferor.
the amount referred to in subsections (2) and (3)(a) above shall not exceed the cost of the new assets but, subject to that, the said amount shall be a fraction
of the amount of the gain on the old assets
where—
“A” is the cost of the new assets, and
“B” is the value of the whole of the consideration received by the transferor in exchange for the business;
and for the purposes of this subsection “the cost of the new assets” means any sums which would be allowable as a deduction under section 32(1)(a) above if the new assets were disposed of as a whole in circumstances giving rise to a chargeable gain.
References in this section to the business, in relation to shares or consideration received in exchange for the business, include references to such assets of the business as are referred to in subsection (1) above.
Annotations
Modifications
- C1
See Finance Act 1988 (c. 39, SIF 63;1, 2), s. 97 and Sch. 9 para. 2(3)
- C2
See Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), s. 763(5) for variation of “B” where a 1979 Act disposal (as defined in Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), s. 763(1)) forms part of a transfer to which s. 123 applies
- C3
See Capital Gains Tax Act 1979 (c. 14), Sch. 6 para. 23 re accrual of development gains
- C4
See Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), Sch. 28 para. 3(2)
Notes on the whole Act
Textual amendments
- F1
Act repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the repealing Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with s. 201(3), Sch. 11 paras. 20, 22, 26(2), 27 and with saving in Sch. 11 para. 24(2)) and subject to an amendment (prosp.) by Museum and Galleries Act 1992 (c. 44), s. 11(2), Sch. 8 Pt. I para. 1(1)(2)(7), and amendments by: Disability Living Allowance and Disability Working Allowance Act 1991 (c. 21), s. 4(2), Sch. 2 para. 9(1)(2) (in force 6.4.1992 by S.I. 1991/2617, art. 2(f)); S.I. 1991/2874, art. 2 (in force 6.4.1992 by S.R. 1992/94, art. 2); Social Security (Consequential Provisions) Act 1992 (c. 6), s. 4, Sch. 2 para. 52(a)(b) (in force 1.7.1992 by s. 7(2) of the amending Act); Social Security (Consequential Provisions) (Northern Ireland) Act 1992 (c. 9), s. 4, Sch. 2 para. 20(a)(b) (in force 1.7.1992 by s. 7(2) of the amending Act); Finance (No. 2) Act 1992 (c. 48), ss. 35(2), 47, 48, 56, 77, Sch. 9 para. 20(1)(inserting ss. 143A and 143B), Sch. 17 paras. 3, 6(2)(5), 7, (the amendments coming into force 16.7.1992 except for the amendment by s. 56, Sch. 9 para. 20(1) which comes into force on 19.2.1993 by S.I. 1993/236, art. 2); and amendments (retrospective to 1.1.1992) by ss. 35(2), 47, 48 of the same 1992 Act, and amendments (27.7.1993 with effect as mentioned in ss. 84(3), 86(4), 88(4), 105(4) of the amending Act) by 1993 c. 34, ss. 84(3), 86(4), 88(4)(a)(b), 105(3)(4)