TAX NEWS - January 2010

United Kingdom: Corporation tax rules for the capital gains of companies

The U.K. Financial Secretary to the Treasury has announced that legislation will be included in Finance Act 2010 on corporation tax rules for the capital gains of companies.

The changes will amend the provisions on qualifying corporate bonds and ensure that a postponed charge on gains arising when assets of an overseas branch are transferred to a nonresident company is brought into charge "at the appropriate time."

As stated in the accompanying Technical Note, the tax authorities became aware of the potential to exploit the current rules while reviewing a major domestic corporate group's request for non-statutory clearance in respect of proposed transactions involving the transfer of an overseas permanent establishment in exchange for shares and loan stock. The changes would take effect from 6 January 2010, the date of the announcement.