CG45332 - Group asset transfers: no gain/loss disposals: exceptions: redeemable shares

TCGA92/S171 (2) (b) – Redeemable Shares

The no gain/no loss rule does not apply to a disposal of redeemable shares in a company on the occasion of their redemption. This exception in TCGA92/S171 (2)(b) overlaps with the exclusion of cases where there is a disposal but no corresponding acquisition.

TCGA92/S171 (2) (c) – Investment Trusts

TCGA92/S171 (2)(c) prevents the no gain/no loss rule applying to a disposal on or after 1 April 1980 by or to an investment trust within ICTA88/S842. With effect from 1 April 1980 the gains of an investment trust are exempt from the capital gains charge under TCGA92/S100 (1). The exclusion of investment trusts from the no gain/no loss rule therefore prevents a group taking advantage of the exempt status of an investment trust which is a group member by passing an asset between the investment trust and another group company as a preliminary to a third party disposal.

Where there has been a no gain/no loss transfer under Section 171(1) to a company which was not an investment trust at the time of the transfer but becomes an investment trust within 6 years of that time, see CTM47000 onwards.

TCGA92/S171 (2) (cc) – Venture Capital Trusts

TCGA92/S171(2)(cc) prevents the no gain/no loss rule applying to a disposal on or after 17 March 1998 by or to a Venture Capital Trust. As with investment trusts, see above, this prevents a group taking advantage of the tax exempt status of a Venture Capital Trust under TCGA92/S100(1).

Where there has been a no gain/no loss transfer under Section 171(1) to a company which was not a Venture Capital Trust at the time of the transfer, but it becomes a Venture Capital Trust from a time within six years of the transfer, see CG41520+.

TCGA92/S171 (2) (cd) & TCGA92/S171 (5) – Incorporated Friendly Societies

TCGA92/S171(2)(cd) prevents the no gain/no loss rule applying to a disposal on or after 17 March 1998 by or to an incorporated friendly society which is a `qualifying friendly society' for the purposes of ICTA88/S461B. As with investment trusts, see above, this prevents a group taking advantage of the tax exemptions available to such societies under ICTA88/S461B.