Paper for paper treatment

By Tolley

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Paper for paper treatment
  • Clearances under TCGA 1992, s 138
  • Drafting the clearance
  • Transactions in securities
  • Refusal of clearance

Clearances under TCGA 1992, s 138

In order for shareholders in a ‘paper for paper’ exchange to have some certainty as to their tax position there is a statutory clearance procedure available under TCGA 1992, s 138. This provides that the taxpayer can request clearance that TCGA 1992, s 137 does not apply, ie that the transaction is for bona fide commercial reasons, the main purpose of which is not for tax avoidance. There is no provision under TCGA 1992, s 138 for a clearance procedure in respect of the other requirements for paper for paper treatment, eg ownership requirements. It is worth noting that as the tax avoidance test in TCGA 1992, s 137 does not apply to ‘minority’ (less than 5%) shareholders; it follows that clearance does not need to be s

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