Commentary

D1.1014 Substantial shareholdings—Effect of earlier transactions on the exemption

Corporate tax
Corporate tax | Commentary

D1.1014 Substantial shareholdings—Effect of earlier transactions on the exemption

Corporate tax | Commentary

D1.1014 Substantial shareholdings—Effect of earlier transactions on the exemption

The substantial shareholding exemption (SSE) legislation provides for a number of situations where earlier transactions would, in the absence of a specific provision, unfairly shorten or, in some cases, lengthen the qualifying period of ownership. These are considered below.

Earlier no gain/no loss transfer

Where the investing company acquired shares or an interest in shares (see D1.1065 for the definition of this) by means of a no gain/no loss transfer, its period of ownership is treated as including that of the transferor company and any other transferor in a chain of no gain/no loss transfers1.

The investing company is treated as being entitled to the same entitlement to and rights in respect of those shares (or interest in shares), as its predecessor had from those shares (or interest in shares) or, if relevant, from the shares (or interest in shares) from which those shares derived.2. In addition, the share rights that the investing company is so treated as being entitled to can include any shares or rights held by another company which the predecessor could have aggregated under the group provisions in TCGA 1992, Sch 7AC, para 93, see D1.1010.

For this purpose a 'no gain/no loss transfer' is defined as one which is deemed to be for a consideration which ensures that neither gain nor loss arises on the disposal, generally an intra-group transfer within TCGA 1992, s 1714.

The definition for this purpose of a no gain/no loss transfer is extended to include

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