This article looks at a tax efficient separation of a companyʼs trading activities by way of indirect trade distribution under the exempt distribution rules (Corporation Tax Act 2010 (CTA 2010), section 1075). All subsequent references are to the separation and partition demerger examples described in part one

To recap, the principal tax challenges were to ensure that the distribution of trade B (with its associated assets and liabilities) to NewCo did not give rise to:

(1)a taxable distribution for income tax purposes for either of Shareholders A or B;

(2)a disposal for capital gains purposes of Shareholder A or Bʼs existing shareholding in the distributing company (Original Co); and