Reconstructions

Produced by a Tolley Corporation Tax expert
Corporation Tax
Guidance

Reconstructions

Produced by a Tolley Corporation Tax expert
Corporation Tax
Guidance
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Sometimes a reorganisation will be more complex than a simple share for share exchange. The ‘paper for paper’ rules relating to share for share exchanges (discussed in the Share for share exchange guidance note) are therefore extended to deal with reconstructions. What constitutes a scheme of reconstruction is discussed in detail below.

Relief is available to shareholders where there is a reconstruction involving the issue of shares and then also either a scheme of arrangement with the members or the transfer of a business. These are considered in more detail below.

More complicated reconstructions are also used when a demerger process is being undertaken. These are discussed in the demergers series of guidance notes, see the Demergers ― overview guidance note as a starting point.

Scheme of reconstruction

Both reconstructions involving a scheme of arrangement (TCGA 1992, s 136) and reconstructions involving the transfer of a business (TCGA 1992, s 139) require us to look at TCGA 1992, Sch 5AA for the definition of a ‘scheme of reconstruction’.

This says:

  1. the scheme involves the issue of ordinary share capital

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  • 13 Sep 2024 06:30

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