(1)M1If—
(a)any securities to which a person who is carrying on a trade which consists wholly or partly in dealing in securities is beneficially entitled are exchanged for other securities; and
(b)the exchange is one to which this section applies,
then, whether or not any additional consideration is given for the exchange but subject to subsection (2) below, that person shall be treated for tax purposes (except as regards any tax payable in respect of dividends or interest), both at the time of the exchange and thereafter, as if the exchange had not taken place, and in that case the produce of any subsequent realisation of any of the securities received by him under the exchange (together with any additional consideration, or the appropriate part of any additional consideration, received by him under the exchange) shall be treated as the produce of the realisation of the corresponding securities surrendered by or transferred from him under the exchange, or of a corresponding part thereof, as the case may be.
[F1(2)Subsection (1) above shall not apply to a person who elects, by notice given to an officer of the Board, not to be treated as mentioned in that subsection.
(2A)A notice under subsection (2) above—
(a)for the purposes of income tax, shall be given on or before the first anniversary of the 31st January next following the year of assessment in whose basis period the exchange takes place;
(b)for the purposes of corporation tax, shall be given no later than two years after the end of the accounting period in which the exchange takes place.
(2B)In paragraph (a) of subsection (2A) above “basis period” means—
(a)in relation to a year of assessment for which a basis period is given by sections 60 to 63, that basis period;
(b)in relation to a year of assessment for which no basis period is given by those sections, the year of assessment.]
(3)The exchanges to which this section applies are—
(a)any exchange effected under any arrangement carried out under section 2 of the M2National Loans Act 1939 or section 14 of the M3National Loans Act 1968 if the Treasury direct, in pursuance of that arrangement, that this section shall apply to exchanges thereunder;
(b)any exchange of securities effected by section 1 of the M4Bank of England Act 1946; and
(c)any exchange of securities effected in pursuance of any enactment passed after 5th April 1946 which provides for the compulsory acquisition of any securities and the issue of other securities in lieu thereof, if the Treasury direct that this section shall apply to exchanges of securities effected in pursuance of that enactment.
(4)In this section “securities” includes shares, stock, bonds, debentures and debenture stock.
Textual Amendments
F1S. 471(2)-(2B) substituted for s. 471(2) (with effect in accordance with s. 135(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 21 para. 12
Marginal Citations
M1Source—1970 s.326