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FO 16: Amortising property
or “Rules for handling special property when companies merge”
You could also call this:

“Rules for land transfers when companies merge or amalgamate”

When a company joins with another company, and land from the first company goes to the new combined company, there are some special rules you need to know about.

If the land wasn’t something the first company was planning to sell for profit, but the new company might sell it and make money under certain rules, the first company is treated as if it sold the land to the new company for what it’s worth right now.

If the first company was planning to sell the land for profit (but not just because of some short-term rules), and the new company might also sell it for profit because of these short-term rules, the same thing happens - it’s treated as if the first company sold it to the new company for what it’s worth now.

There’s also a rule about selling the land soon after the companies join. If the first company might have had to pay tax on selling the land because of certain short-term rules, and the new company sells the land within 2 or 10 years (depending on which rule applies) after the first company got it, then the money from selling the land counts as income for the new company. The exact rule that applies depends on which section of the law fits the situation.

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Next up: FO 18: When amalgamating companies are parties to financial arrangement

or “Financial arrangements when companies merge”
Next

Part F Recharacterisation of certain transactions
Amalgamation of companies

FO 17Land

  1. This section applies when land belonging to an amalgamating company passes to the amalgamated company on a resident’s restricted amalgamation.

  2. The amalgamating company is treated as having disposed of the land to the amalgamated company at the market value of the land at the date of the amalgamation if—

  3. the land is not revenue account property of the amalgamating company, and the disposal of the land would give rise to income for the amalgamated company under any of sections CB 6A to CB 14 (which relate to the disposal of land):
    1. the land is revenue account property of the amalgamating company but not merely because of the 2-year bright-line test in section CB 6A or the 10-year rule in any of sections CB 9 to CB 11 and CB 14, and the land is, or may be, revenue account property of the amalgamated company because of the 2-year bright-line test or the 10-year rule.

      1. If the land is, or may be, revenue account property of the amalgamating company because of the 2-year bright-line test in section CB 6A or the 10-year rule in any of sections CB 9 to CB 11 and CB 14, and the amalgamated company disposes of the land within the relevant 2-year or 10-year period after the amalgamating company acquired it, an amount derived from the disposal is income of the amalgamated company under whichever is applicable of sections CB 6A to CB 14.

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      Notes
      • Section FO 17(2) heading: replaced (with effect on 1 October 2015), on , by section 17 of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
      • Section FO 17(2): replaced (with effect on 1 October 2015), on , by section 17 of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
      • Section FO 17(2)(a): amended, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
      • Section FO 17(2)(a): amended (with effect on 27 March 2021), on , by section 73(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
      • Section FO 17(2)(b): replaced, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
      • Section FO 17(3) heading: replaced, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
      • Section FO 17(3): replaced, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).