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HMRC internal manual

Capital Gains Manual

Group share exchanges: Westcott v Woolcombers Ltd

In the case where group company A exchanges its shareholding in subsidiary company B for shares issued by another group company C, and roll-over treatment applies, then from the point of view of company A its shares in C are regarded as the same asset as its previous shareholding in B. If therefore company A subsequently sells the company C shares, the gain on that disposal will reflect the gain on the company B shares up to the time of the share exchange. This is because the capital gains cost of A’s shares in B becomes the capital gains cost to A of the shares which C issues on the exchange.