CITM8030 - Restructuring of CDFI: Company reconstruction

TCGA92/s151BC TCGA92/S135 & 136 provide that, in certain circumstances, where shares or securities of one company are exchanged for those of another company as a result of a company reconstruction or amalgamation there is no immediate charge to Capital Gains Tax on the shareholders. The share exchange is treated as if it was a reorganisation of share capital to which TCGA92/S127 – 131 applies (see CG52500).

TCGA92/S135 & 136 are disapplied where

• there is a company reconstruction or amalgamation as a result of which the shares in or debentures of a CDFI are exchanged for shares or debentures of another company
• the shares or debentures of the CDFI are shares or debentures to which community investment tax relief was attributable immediately before the reconstruction or amalgamation, and
• the investor has held those shares or debentures continuously since their issue.

The effect is that there is a disposal of shares or debentures to which community investment tax relief is attributable where, as a result of a company reconstruction or amalgamation to which TCGA92/S135-136 would otherwise apply, those shares or debentures are exchanged for shares or debentures in another company.