Taxation of Chargeable Gains Act 1992

[F1 Periods of share ownership not to count in a case of value shifting U.K.

Textual Amendments

F1 Sch. A1 inserted (with effect in accordance with s. 121(4) of the amending Act) by Finance Act 1998 (c. 36), s. 121(2), Sch. 20

12 (1) This paragraph applies (subject to sub-paragraph (4) below) where— U.K.

(a) there is a disposal of an asset consisting of shares in a close company, and

(b) at least one relevant shift of value involving that asset has occurred between the relevant time and the time of the disposal.

(2) So much of the period after 5th April 1998 for which the asset had been held at the time of its disposal as falls before the time, or latest time, in that period at which there was a relevant shift of value involving that asset shall not count for the purposes of taper relief.

(3) For the purposes of this paragraph a relevant shift of value involving any asset shall be taken to have occurred whenever—

(a) a person having control of a close company exercised his control of that company so that value passed into that asset out of a relevant holding; or

(b) effect was given to any other transaction by virtue of which value passed into that asset out of a relevant holding.

(4) A relevant shift of value involving an asset shall be disregarded for the purposes of this paragraph if—

(a) that shift of value is one in which the value passing into that asset out of the relevant holding is insignificant; or

(b) that shift of value took place at a time when the qualifying holding period of the relevant holding was at least as long as the qualifying holding period of that asset.

(5) In sub-paragraphs (3) and (4) above the references to a relevant holding shall be construed, in relation to any case in which value has passed out of one asset into another asset consisting of shares in a company, as a reference to any holding by—

(a) the person who, following the exercise of control or other transaction by virtue of which the value has passed, held the other asset, or

(b) a person connected with him,

of any shares in that company or in a company under the control of the same person or persons as that company.

(6) For the purposes of sub-paragraph (4)(b) above the reference to the qualifying holding period of a holding or other asset at the time when a shift of value takes place shall be taken to be what, in relation to a disposal at that time of that holding or other asset by the person then entitled to dispose of it, would be taken to have been its qualifying holding period for the purposes of section 2A.

(7) In this paragraph references to shares in a company include references to rights over a company.

(8) In this paragraph “the relevant time”, in relation to the disposal of an asset consisting of shares in a company, means the beginning of the period after 5th April 1998 for which that asset had been held at the time of its disposal.]