Income and Corporation Taxes Act 1988

575 Exclusion of relief under section 573 F1 . . . in certain cases. U.K.

M1 (1) [F2 Section 573 does] 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

[F3 (ba) a disposal within section 24(1) of the 1992 Act (entire loss, destruction, dissipation or extinction of asset); or]

(c) a deemed disposal under section [F4 24(2) of the 1992 Act] (claim that value of asset has become negligible).

(2) Where a [F5 company] disposes of shares (“the new shares”) which by virtue of section [F6 127 of the 1992 Act] (reorganisation etc. treated as not involving disposal) are identified with other shares (“the old shares”) previously held by [F7 it], relief shall not be given under section 573 F8 . . . on the disposal of the new shares unless—

(a) relief under section 573 F8 . . . could (or if this section had been in force could) have been given on a disposal of the old shares if [F7 it] 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 [F6 127 of the 1992 Act]; or

(b) [F7 it] gave new consideration for the new shares;

but in a case within paragraph (b) above the amount of relief under section 573 F8 . . . 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.

(3) Where the shares are the subject of an exchange or arrangement of the kind mentioned in section [F9 135 or 136 of the 1992 Act] (company reconstructions etc.) which by reason of section [F9 137] of that Act involves a disposal of the shares, section 573 F10 . . . shall not apply to any allowable loss incurred on the disposal.

[F11 (4) In this section “new consideration” means consideration in money or money's worth other than consideration of the kind excluded by paragraph (a) or (b) of section 128(2) of the 1992 Act.]

Textual Amendments

F1 Words in s. 575 sidenote repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 119(2), Sch. 3 Pt. 1 (with Sch. 2)

F2 Words in s. 575(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 119(3) (with Sch. 2)

F3 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)

F4 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))

F5 Word in s. 575(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 119(4)(a) (with Sch. 2)

F6 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))

F7 Words in s. 575(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 119(4)(b) (with Sch. 2)

F8 Words in s. 575(2) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 119(4)(c), Sch. 3 Pt. 1 (with Sch. 2)

F9 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))

F10 Words in s. 575(3) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 119(5), Sch. 3 Pt. 1 (with Sch. 2)

F11 S. 575(4) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 119(6) (with Sch. 2)

Modifications etc. (not altering text)

C1 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)

C2 S. 575 transposed from Pt. 13 Ch. 6 to Pt. 13 Ch. 5A (6.4.2007 with effect in accordance with s. 1034(1) of the affecting Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 119(7) (with Sch. 2)

Marginal Citations

M1 Source-1980 s.37(6)-(8); 1981 s.36(6)