Reconstructions

Produced by Tolley in association with Nick Wright
Corporation Tax
Guidance

Reconstructions

Produced by Tolley in association with Nick Wright
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 (see TCGA 1992, s 136) and reconstructions involving the transfer of a business (see 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

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Nick Wright
Nick Wright linkedinicon

Director, Jerroms Miller


As a member of the ICAEW and CIOT Nick specialises in technical corporate tax planning and company reorganisations advising on a variety of projects from mergers and acquisitions, management buyouts and demergers to venture capital schemes (EIS/SEIS) and employee incentives including share schemes.Nick is a regular writer for various tax journals with articles published in Taxation, Tax Adviser and ICAEW Taxline. He also contributes to Tolley's Tax Planning.Presenting regular lectures to fellow professionals through various CPD providers including MBL, CPDStore and a variety of CIOT branches.Nick is host of the Jerroms Miller Tax Hour podcast.

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  • 06 Jul 2026 09:00

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