Corporation Tax

Reconstructions involving transfer of business

Produced by Tolley
  • 27 Jun 2022 10:02

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Reconstructions involving transfer of business
  • Reconstructions involving share issues
  • Reconstructions involving the transfer of a business

Reconstructions involving transfer of business

The ‘paper for paper’ rules relating to share for share exchanges are extended to deal with reconstructions. Relief is available to shareholders where there is a reconstruction involving the issue of shares, and when there is a reconstruction involving the transfer of a business. These are considered in more detail below.

For information on the rules relating to share for share exchanges, see the Share for share exchange guidance note.

Reconstructions involving share issues

TCGA 1992, s 136 deals with reconstructions involving the issue of shares. This section applies where:

  1. an arrangement between a company (Company A) and either:

    1. the persons holding shares in or debentures of the company

    2. where there are different classes of shares in or debentures of the company, the persons holding any class of those shares or debentures

  2. it is entered into for the purposes of, or in connection with, a scheme of reconstruction, and under the arrangement:

    1. another company (Company B) issues shares or debentures to those persons in respect of, and in proportion to (or as nearly as may be in proportion to), their relevant holdings in Company A

    2. the shares in or debentures of Company A comprised in relevant holdings are retained by those persons or are cancelled or otherwise extinguished

Where this section applies:

  1. those persons are treated as exchanging their relevant holdings in Company A for the shares or debentures held by them in consequence of the arrangement

  2. TCGA 1992,

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Popular Articles

Legal and professional fees

Statutory references to ITTOIA 2005 relate to unincorporated businesses and CTA 2009 relate to companies unless otherwise stated.Legal and other professional fees can represent substantial costs to a business. A detailed analysis is often required for the purpose of preparing tax computations as

01 Jul 2022 09:31 | Produced by Tolley Read more Read more

Qualifying year for state pension purposes

Why is this important?In order to get a full basic state pension, an individual must have paid sufficient national insurance contributions (NIC) for a minimum number of qualifying years in their working life. As NIC cannot be paid in the tax year before the individual reaches the age of 16, or in a

24 Mar 2022 07:40 | Produced by Tolley Read more Read more

Premiums on leases

OutlineWhen a property investor grants a lease, potentially this could be done on the basis that the tenant pays a premium for the initial grant of the lease, in addition to also paying rent over the term of the lease. In the absence of specific legislation to the contrary, such premiums would all

27 Jun 2022 10:05 | Produced by Tolley Read more Read more