The following Tax guidance note provides comprehensive and up to date legal information covering:
This practice note:
outlines the key UK tax issues that a company raising funds by way of a rights issue might wish to consider, and
unless stated otherwise, assumes that:
the issuing company is a UK incorporated and tax resident company and, for VAT purposes, belongs in the UK
the issuing company only offers new non-redeemable shares under the rights issue
the shares to be issued under the rights issue are denominated in the same currency as the issuer's functional currency (ie the currency used by the issuing company to draw up its accounts)—where the issuer's functional currency differs from the currency in which the shares are denominated and provided specific conditions are satisfied, any gain or loss on a derivative contract entered into by the issuer to hedge its currency exchange rate risk is ignored for corporation tax purposes, for which see: Share issues—key tax considerations, and
the underwriters belong in the UK for VAT purposes
For information on what a rights issue is, see: What is a rights issue? and HMRC's published guidance.
In a rights issue, the issuing company issues new shares to subscribers. The subscribers are usually made up of a combination of existing shareholders and third party investors procured by the underwriter(s).
The shares are newly created on issue
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