ICTA88/S574 (1) provides that ‘an individual who has
subscribed for shares’ may claim VC loss relief. Shares are
subscribed for when they are issued by the company, either on
incorporation or at a later date, in consideration of money or
money’s worth, ICTA88/S574 (3)(a). Shares which were
purchased, or acquired by gift, will not have been subscribed for
and will not usually be eligible for relief. However, there is one
exception to this rule. ICTA88/S574 (3)(b) extends the scope of the
relief so that an individual is treated as having subscribed for
shares if their spouse or civil partner did so and subsequently
transferred the shares to them. The spouses or civil partners must
be living together - TCGA92/S288 (3) - in order for this rule to
apply.
Shares may be issued on a share reorganisation, for example
by a bonus or rights issue. Alternatively, shares may be issued on
a share exchange or as part of a company reconstruction or
amalgamation. ICTA88/S575 (2) provides that when shares are so
issued relief will only be available where the original shares were
subscribed for, unless the shareholder gives new consideration for
the new shares. See
VCM48000 onwards for detailed guidance
on the rules in ICTA88/S575 (2) and examples show how they work in
practice.
