Finance Act 1996

Holding becoming or ceasing to be paragraph 4 holding

5 (1) Section 116 of the 1992 Act (reorganisations etc. involving qualifying corporate bonds) shall have effect in accordance with the assumptions for which this paragraph provides if—

(a) a relevant holding is held by a company both at the end of one accounting period and at the beginning of the next; and

(b) paragraph 4 above applies to that holding for one of those periods but not for the other.

(2) Where—

(a) the accounting period for which paragraph 4 above applies to the relevant holding is the second of the periods mentioned in sub-paragraph (1) above, and

(b) the first of those periods is not a period ending on 31st March 1996 or a period at the end of which there is deemed under section 212 of the 1992 Act to have been a disposal of the relevant holding,

the holding shall be assumed to have become a holding to which paragraph 4 above applies for the second of those periods in consequence of the occurrence, at the end of the first period, of a transaction such as is mentioned in section 116(1) of that Act.

(3) In relation to the transaction that is deemed to have occurred as mentioned in sub-paragraph (2) above—

(a) the relevant holding immediately before the beginning of the second accounting period shall be assumed to be the old asset for the purposes of section 116 of the 1992 Act; and

(b) the relevant holding immediately after the beginning of that period shall be assumed for those purposes to be the new asset.

(4) Where the accounting period for which paragraph 4 above applies to the relevant holding is the first of the periods mentioned in sub-paragraph (1) above, then, for the purposes of the 1992 Act—

(a) the holding shall be assumed to have become a holding to which paragraph 4 above does not apply for the second of those periods in consequence of the occurrence at the beginning of the second of those periods of a transaction such as is mentioned in section 116(1) of that Act;

(b) the relevant holding immediately before the beginning of that second period shall be assumed, in relation to that transaction, to be the old asset for the purposes of section 116 of the 1992 Act; and

(c) the relevant holding immediately after the beginning of that period shall be assumed, in relation to that transaction, to be the new asset for those purposes.

(5) In this paragraph “the 1992 Act” means the [1992 c. 12.] Taxation of Chargeable Gains Act 1992.