Part II General Provisions relating to computation of gains and acquisitions and disposals of assets
Chapter II Assets and disposals of assets
Value shifting
34 Transactions treated as a reorganisation of share capital.
(1)
Where—
(a)
but for F1section 135 or 136, section 30 would have effect as respects the disposal by a company (“the disposing company”) of an asset consisting of shares in or debentures of another company (“the original holding”) in exchange for shares in or debentures of a further company which, immediately after the disposal, is not a member of the same group as the disposing company, and
(b)
if section 30 had effect as respects that disposal, any allowable loss or chargeable gain accruing on the disposal would be calculated as if the consideration for the disposal were increased by an amount,
the disposing company shall be treated for the purposes of section 128(3) as receiving, on the reorganisation of share capital that is treated as occurring by virtue of F2section 135 or 136, that amount for the disposal of the original holding.
F3(1A)
Subsection (1B) below applies where, but for F4section 135 or 136, section 30 would have effect, by virtue of section 31A, as respects the disposal by a company (“the disposing company”) of an asset consisting of shares in or debentures of another company (“the original holding”) in exchange for shares in or debentures of a further company which, immediately after the disposal, is not a member of the same group as the disposing company.
(1B)
Section 31A shall apply as if F4section 135 or 136 did not apply.
(1C)
In applying section 31A(7) and (8)—
(a)
the reference in section 31A(8) to an allowable loss or chargeable gain which accrued on the section 30 disposal shall be taken as a reference to the allowable loss or chargeable gain which would have accrued had F5section 135 or 136 not applied, and
(b)
an allowable loss shall be treated as a chargeable gain of nil.
(2)
F6In subsections (1) to (1C) “group” has the same meaning as in sections 30 to 33.