VCM48100 - VC loss relief: special rules for share reorganisations: issue of shares treated as reorganisation of share capital

ICTA88/S575 (2)

A share issue may be treated as a share reorganisation if the shares are issued to existing shareholders. For further guidance on share reorganisations see CG51700 onwards. If the transaction is not at arm's length TCGA92/S128 (2) may restrict the allowable cost of the shares to the ‘relevant increase in value’ of the new holding. Depending on the circumstances, there may be little or no increase in value of the new holding of shares. If so, any claim under ICTA88/S574 will be similarly reduced, or eliminated. For further guidance on Section 128(2) see CG51840 onwards.