CG52623 - Share exchange: anti-avoidance: TCGA92/S137 not to apply in small cases

TCGA92/S137

The anti-avoidance provisions do not apply if the taxpayer, either alone or with connected persons, only holds five per cent or less of, or of any class of, the issued share capital or debentures in the company being taken over. If, on or after 1 December 2003, that company holds some of its shares in treasury those shares don't count as issued share capital when it comes to the calculation (see CG50287). You apply the test in TCGA92/S137 (2) to any holding of shares or debentures, and not merely those shares or debentures which are being acquired. Therefore, a taxpayer cannot claim the protection of Section 137(2) when selling a five per cent holding of ordinary shares if he or she also holds 10 per cent of the company's debentures.