Taxation of Chargeable Gains Act 1992 Schedule 5AA paragraph 4

Third condition: continuity of business

Section 4 of Schedule 5AA sets out the third condition for a qualifying scheme of reconstruction, which requires that the whole or substantially the whole of the original business continues to be carried on by the successor company or companies after the restructuring.

• Where one original company is involved, its business (or substantially the whole of it) must be carried on after the restructuring either by a single different successor company, or by two or more successor companies (which may include the original company itself).
• Where multiple original companies are involved, all or part of the business of at least one original company must pass to a different company, and the whole or substantially the whole of all the original businesses must continue — either through a single successor or through multiple successors, which may include the original companies.
• Where a company controls another company, the controlled company's business is treated as also being carried on by the controlling company, using the definition of "control" in section 1124 of CTA 2010.
• Any assets retained by an original company solely for the purpose of making a capital distribution to its shareholders are disregarded when assessing whether the continuity of business condition is met.