Reorganisations and tax

Corporate reorganisations and reconstructions are afforded special tax treatment intended to make these arrangements neutral for the purposes of taxation on chargeable gains. Without this special regime, the arrangements would result in disposals giving rise to capital gains tax or corporation tax on chargeable gains.

Reliefs are available both for shareholders and, where relevant, the company being reorganised.

The underlying policy rationale is that, as there is no substantial change in the economic ownership of the underlying business of the reorganised or reconstructed company, and to the extent no value is extracted, such transactions should not be taxed.

The tax relief afforded to reorganisations ensures that companies retain the flexibility to arrange their capital structure in the way they see best.

Reorganisations

Reorganisations of share capital involve a single company. They include transactions that increase or reduce a company's share capital.

Reorganisations involve new shares or debentures (the new holding) being issued by the reorganised company to its shareholders in respect of and in proportion to their shareholding before the reorganisation (the original shares).

A reorganisation can be restricted to a particular class of shares.

The

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Latest Tax News

Tax weekly highlights—23 October 2025

This week's edition of Tax weekly highlights includes: (1) News Analysis on the FTT’s decision in Lands Luo Ltd v HMRC which includes further consideration of the tests for allowing a late appeal following the recent Upper Tribunal decision in Medpro Healthcare Ltd v HMRC, (2) new regulations designating further special tax sites in relation to Anglesey Freeport and the Flintshire and Wrexham Investment Zone, and (3) the signing of a new tax treaty between the UK and Portugal.

FTT expresses preference for Martland over Medpro in late appeal decision (Lands Luo Ltd v HMRC)

Tax analysis: In Lands Luo Ltd v HMRC, the First-tier Tax Tribunal (FTT) granted permission for a late appeal against refusal of a VAT repayment claim. Late appeals are common, but this one is interesting because of the recent uncertainty arising from the Upper Tribunal’s (UT) decision in Medpro and, perhaps relatedly, because the FTT panel in this case included the Senior President of Tribunals.

FTT refuses to reinstate appeal that had been withdrawn by the taxpayer during the original hearing (Scott Brothers Ltd v HMRC)

Tax analysis: In Scott Brothers Ltd v HMRC, the First-tier Tax Tribunal (FTT) dismissed an application by the company to reinstate its appeal. The company had withdrawn its appeal following the first day of the original hearing.

High Court decides that Danish Tax Authority failed to prove inducement by misrepresentation (SKAT v Solo Capital Partners)

Tax analysis: The High Court dismissed the fraud claims brought by the Danish Tax Authority, Skatteforvaltningen (SKAT) arising out of the cum-ex trading scandal. SKAT alleged that it had been wrongfully induced to pay claims for repayment of Danish withholding tax by misrepresentations made in documents submitted to it. However, the court held that while the refund claims were invalid, SKAT had failed to show that it had been induced to make the payments in reliance on false representations. The documents submitted to SKAT did not contain the majority of the representations alleged by SKAT and the process by which the claims were approved was so mechanistic and unthinking that no regard was had to the alleged misrepresentations. While the court found that many of the defendants were dishonest at the time and were untrustworthy witnesses at trial, this was not sufficient to prove the particular case as pleaded by SKAT. The judgment confirms the importance of factual evidence when establishing claims for misrepresentation Written by Edward Reed (senior advisor), Alice Mason (senior associate) and Victoria Braid (associate) at Macfarlanes LLP.