80(1)Where a company (“the company”) holds shares which—U.K.
(a)form part of the ordinary share capital of another company,
(b)are of the same class and held in the same capacity, and
(c)include shares falling within two or more of the categories in sub-paragraph (2),
then, where there is a reorganisation affecting those shares to which section 116 or section 127 of the 1992 Act applies, section 116 or (as the case may be) section 127 shall apply separately to shares falling within each of those categories.
(2)The categories referred to in sub-paragraph (1)(c) are—
(a)shares to which deferral relief is attributable;
(b)shares—
(i)to which investment relief but not deferral relief is attributable, and
(ii)which have been held continuously by the company since the time they were issued until the reorganisation; and
(c)shares not within paragraph (a) or (b) above.
(3)In this paragraph “reorganisation” has the meaning given in section 126 of the 1992 Act.
81(1)Where—U.K.
(a)a company (“the company”) holds shares (“the existing holding”) which—
(i)form part of the ordinary share capital of another company, and
(ii)are of the same class and held in the same capacity,
(b)there is by virtue of such an allotment as is mentioned in section 126(2)(a) of the 1992 Act (an allotment of shares or debentures in respect of and in proportion to an original holding), other than an allotment of corresponding bonus shares, a reorganisation affecting the existing holding,
(c)immediately following the reorganisation, investment relief is attributable to the shares comprised in the existing holding or the shares allotted in respect of those shares, and
(d)if investment relief is attributable to the shares comprised in the existing holding at that time, those shares have been held by the company continuously from the time they were issued until the reorganisation,
sections 127 to 130 of that Act (treatment of share capital following a reorganisation) shall not apply in relation to the existing holding.
(2)Subsection (10) of section 116 of that Act (reorganisations, conversions and reconstructions) shall not apply in any case where the old asset consists of shares held (in the same capacity) by a company—
(a)that have been held by it continuously from the time they were issued until the relevant transaction, and
(b)to which investment relief is attributable immediately before that transaction.
In this sub-paragraph “old asset” and “the relevant transaction” have the meanings given in section 116 of that Act.
(3)For the purposes of sub-paragraph (1)—
“” means bonus shares that—
are issued in respect of shares comprised in the existing holding, and
are of the same class, and carry the same rights, as those shares;
“reorganisation” has the meaning given in section 126 of that Act.
82(1)Where—U.K.
(a)a company (“the company”) holds shares (“the existing holding”) in a company (“company A”),
(b)there is a reconstruction or amalgamation affecting the existing holding,
(c)immediately before the reconstruction or amalgamation, investment relief is attributable to the shares comprised in the existing holding, and
(d)the shares comprised in the existing holding have been held by the company continuously from the time they were issued until the reconstruction or amalgamation,
sections 135 and 136 of the 1992 Act ([F1share exchanges and company reconstructions]) shall not apply in respect of the existing holding.
This is subject to paragraph 84 (no disposal on certain exchanges of shares).
(2)Sub-paragraph (1)(a) applies only where the shares are held by the company in the same capacity.
(3)For the purposes of sub-paragraph (1) a “reconstruction or amalgamation” means an issue by a company (“company B”) of shares in or debentures of that company in exchange for or in respect of shares in or debentures of company A.
Textual Amendments
F1Words in Sch. 15 para. 82(1) substituted (24.7.2002 with effect as mentioned in Sch.9 para.7(1) of the amending Act) by 2002 c. 23, s. 45, Sch. 9 para. 6(3)
83(1)Paragraphs 84 and 85 apply where—U.K.
(a)arrangements are made in accordance with which a company (“the new company”) acquires all the shares (“”) in another company (“the old company”);
(b)the acquisition provided for by the arrangements falls within sub-paragraph (2); and
(c)the Inland Revenue have, before any exchange of shares takes place under the arrangements, given an approval notification.
(2)An acquisition of shares falls within this sub-paragraph if—
(a)the consideration for the old shares consists wholly of the issue of shares (“”) in the new company;
(b)new shares are issued in consideration of old shares only at times when there are no issued shares in the new company other than—
(i)subscriber shares, and
(ii)new shares previously issued in consideration of old shares;
(c)the consideration for new shares of each description consists wholly of old shares of the corresponding description; and
(d)new shares of each description are issued to the holders of old shares of the corresponding description in respect of, and in proportion to, their holdings.
(3)For the purposes of sub-paragraph (1)(c) an approval notification is one which, on an application by either the old company or the new company, is given to the applicant company and states that the Inland Revenue are satisfied that the exchange of shares under the arrangements—
(a)will be effected for commercial reasons, and
(b)will not form part of any such scheme or arrangements as are mentioned in section 137(1) of the 1992 Act (schemes with tax avoidance purpose).
(4)For the purposes of this paragraph old shares and new shares are of a corresponding description if, on the assumption that they were shares in the same company, they would be of the same class and carry the same rights.
(5)In this paragraph references to “shares", except in the expression “subscriber shares", include securities.
(6)References in paragraphs 84 to 87 to “”, “”, “”, “the old company” and “the new company” shall be construed in accordance with this paragraph.
84(1)Where this paragraph applies (see paragraph 83 [F2and paragraph 4 of Schedule 7AC to the Taxation of Chargeable Gains Act 1992]), nothing in paragraph 82 has effect to disapply section 135 of the 1992 Act (exchange of shares etc. for those in another company).U.K.
Accordingly, by virtue of section 127 of that Act (as applied by section 135(3)), the exchange of shares is not treated as involving a disposal of the old shares or an acquisition of the new shares.
(2)In its application by virtue of sub-paragraph (1), section 127 of the 1992 Act shall have effect subject to paragraph 80 (shares to which investment relief or investment and deferral relief is attributable treated as separate holdings).
Textual Amendments
F2Words in Sch. 15 para. 84(1) inserted (24.7.2002 with effect as mentioned in s. 44(3) of the amending Act) by 2002 c.23, s. 44(2), Sch. 8 Pt. 2 para. 5
85(1)Where this paragraph applies (see paragraph 83 [F3and paragraph 4 of Schedule 7AC to the Taxation of Chargeable Gains Act 1992]), any investment relief or deferral relief which is attributable to any old shares shall be attributable instead to the new shares for which they are exchanged.U.K.
(2)Where investment relief becomes so attributable to any new shares—
(a)this Schedule shall have effect as if anything which under paragraph 41, 42, 60 or 65 has been done, or is required to be done, by or in relation to the old company had been done, or were required to be done, by or in relation to the new company; and
(b)any appeal brought by the old company against—
(i)the refusal of the Inland Revenue to authorise the issue of a compliance certificate, or
(ii)a notice under paragraph 60(3)(b),
may be prosecuted by the new company as if it had been brought by that company.
Textual Amendments
F3Words in Sch. 15 para. 85(1) inserted (24.7.2002 with effect as mentioned in s. 44(3) of the amending Act) by 2002 c. 23, s. 44(2), Sch. 8 Pt. 2 para.5
Modifications etc. (not altering text)
C1Sch. 15 para. 85 excluded (24.7.2002 with effect as mentioned in s. 44(3) of the amending Act) by 1992 c. 12, Sch. 7AC Pt. 1 para. 4(4) (as inserted by 2002 c. 23, s. 44(2), Sch. 8 para. 1)
86(1)This paragraph applies where—U.K.
(a)relief becomes attributable, by virtue of paragraph 85, to any new shares held by a company (“the company”), and
(b)the old shares for which those shares were exchanged (“”) were—
(i)subscribed for by and issued to the company, and
(ii)held by it continuously from the time they were issued until the exchange.
(2)Where this paragraph applies this Schedule [F4(except paragraph 29(7))] shall have effect as if—
(a)the matching new shares had been subscribed for by the company at the time when, and for the amount for which, the relevant old shares were subscribed for,
(b)the matching new shares had—
(i)been issued at the time when the relevant old shares were issued, and
(ii)been held continuously by the company from that time until the exchange,
(c)any claim for relief under Part V (investment relief), or Part VIII (deferral relief), of this Schedule made in respect of the relevant old shares had been made in respect of the matching new shares, and
(d)the company’s liability to corporation tax had been reduced under Part V of this Schedule in respect of the matching new shares for the same accounting period as that for which its liability was so reduced in respect of the relevant old shares.
(3)For the purposes of this paragraph old shares and new shares are matching shares in relation to each other if the old shares are the shares for which those new shares are exchanged under the arrangements.
Textual Amendments
F4Words in Sch. 15 para. 86(2) inserted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 16 paras. 10, 13
87(1)This paragraph applies where paragraph 86 (substitution of new shares for old shares) applies in relation to any new shares held by a company.U.K.
(2)If, immediately before the exchange, any of the requirements of paragraphs 5, 8 and 13 (requirements to be met by a qualifying investing company in relation to the relevant shares) was (or was deemed to be) met to any extent by the company in relation to the matching old shares, the requirement shall be deemed to be met by the company to the same extent in relation to the new shares.
(3)If, immediately before the exchange, any of the requirements of paragraphs 16 to 22 (requirements to be met by a qualifying issuing company) was (or was deemed to be) met to any extent by the old company in relation to the matching old shares, it shall be deemed to be met to the same extent by the new company in relation to the new shares.
(4)In determining whether the requirements of paragraphs 17 (the independence requirement) and 20 (the qualifying subsidiaries requirement) are met in relation to the old company or the new company at a time in the period for giving effect to the arrangements, both—
(a)the arrangements themselves, and
(b)any exchange of new shares for old shares that has already taken place under the arrangements,
shall be disregarded.
(5)If, immediately before the period for giving effect to the arrangements, the requirement of paragraph 23(1) (the trading activities requirement) was (or was deemed to be) met to any extent by the old company in relation to the matching old shares—
(a)it shall be deemed to be met to the same extent by the new company in relation to the new shares, and
(b)to the extent that it would not otherwise be the case, it shall also be deemed to be met by that company in relation to those shares at all times which—
(i)fall in the period for giving effect to the arrangements, and
(ii)do not fall after a time when (apart from the arrangements) the requirement would have ceased to have been met by the old company in relation to the matching old shares.
(6)For the purposes of this paragraph—
(a)“the period for giving effect to the arrangements” means the period which—
(i)begins when those arrangements first come into existence; and
(ii)ends when the new company completes its acquisition under the arrangements of all the old shares;
and
(b)references to matching shares shall be construed in accordance with paragraph 86(3).
88U.K.The following provisions of the 1992 Act have effect subject to paragraphs 80, 81, 82 and 84 (which make special provision in respect of company reorganisations etc. involving shares to which investment relief is attributable)—
section 116 (reorganisations, conversions and reconstructions); and
Chapter II of Part IV (reorganisation of share capital, conversion of securities etc.).