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FM 21: Property transfers when companies leave consolidated groups
or “Rules for property when a company leaves a tax group”
You could also call this:

“Rules to prevent companies from dodging group tax responsibilities when transferring property”

This section talks about what happens when a company tries to avoid the rules about joining and leaving a group of companies for tax purposes. Here’s what you need to know:

If a company joins a group and has some property, then gives that property to another company in the group, special rules usually apply to that transfer. However, if the company then leaves the group (by closing down or any other way), those special rules might not apply.

The government wants to make sure companies don’t try to cheat the system. So, if it looks like the company was trying to get around the rules about joining and leaving groups, the special rules for transferring property won’t apply.

This means that if you’re part of a company that’s joining or leaving a group, you need to be careful about transferring property. If it seems like you’re just doing it to avoid taxes, you might get in trouble.

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Next up: FM 23: Arrangements for disposal of shares

or “Rules for selling shares between related companies”
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Part F Recharacterisation of certain transactions
Consolidated groups of companies: Accounting for particular property

FM 22Arrangements to avoid consolidation rules

  1. This section applies when—

  2. a company joins a consolidated group and at the time holds property that it later transfers to another group company; and
    1. sections FM 15 or FM 17 to FM 20 would otherwise apply to the transfer of the property; and
      1. after the transfer the company leaves the consolidated group, whether by liquidation or otherwise.

        1. If, in undertaking the activities, it could reasonably be concluded that the company was involved in an arrangement that had a purpose or effect of defeating the intent and application of the consolidation rules, the relevant provision does not apply to the transfer.

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