PART XIII MISCELLANEOUS SPECIAL PROVISIONS

Chapter 5A Share loss relief

Relief for losses on unquoted shares in trading companies

575 Exclusion of relief under section 573 or 574 in certain cases.
(1) Sections 573 and 574 do not apply unless the disposal is—
(a) by way of a bargain made at arm’s length for full consideration; or
(b) by way of a distribution in the course of dissolving or winding up the company; or
(ba) a disposal within section 24(1) of the 1992 Act (entire loss, destruction, dissipation or extinction of asset); or
S. 575(1)(ba) inserted (with effect in accordance with s. 63(3)(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 16 para. 3(3)
(c) a deemed disposal under section 24(2) of the 1992 Act (claim that value of asset has become negligible).
Words in s. 575(1)(c) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation and Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(34)(a) (with ss. 60, 101(1), 171, 201(3))
Source-1980 s.37(6)-(8); 1981 s.36(6)
(2) Where a person disposes of shares (“the new shares”) which by virtue of section 127 of the 1992 Act (reorganisation etc. treated as not involving disposal) are identified with other shares (“the old shares”) previously held by him, relief shall not be given under section 573 or 574 on the disposal of the new shares unless—
(a) relief under section 573 or 574 could (or if this section had been in force could) have been given on a disposal of the old shares if he had incurred an allowable loss in disposing of them as mentioned in subsection (1)(a) above on the occasion of the disposal that would have occurred but for section 127 of the 1992 Act; or
(b) he gave new consideration for the new shares;
but in a case within paragraph (b) above the amount of relief under section 573 or 574 on the disposal of the new shares shall not exceed the amount or value of the new consideration taken into account as a deduction in computing the loss incurred on their disposal.
Words in s. 575(2) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation and Chargeable Gains Act 1992 (c. 12), ss. 289, 290(1), Sch. 10 para. 14(34)(b) (with ss. 60, 101(1), 171, 201(3))
(3) Where the shares are the subject of an exchange or arrangement of the kind mentioned in section 135 or 136 of the 1992 Act (company reconstructions etc.) which by reason of section 137 of that Act involves a disposal of the shares, section 573 or 574 shall not apply to any allowable loss incurred on the disposal.
Words in s. 575(3) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation and Chargeable Gains Act 1992 (c. 12), ss. 289, 290(1), Sch. 10 para. 14(34)(c) (with ss. 60, 101(1), 171, 201(3))
Ss. 574-576 applied (with effect in accordance with s. 93(11) of the affecting Act) by Finance Act 1994 (c. 9), Sch. 12 para. 3(3)
Pt. 13 Ch. 5A created (6.4.2007 with effect in accordance with s. 1034(1) of the affecting Act) by virtue of Income Tax Act 2007 (c. 3), Sch. 1 para. 117(3) (with Sch. 2)