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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Group share exchanges: Westcott v Woolcombers Ltd

The Woolcombers decision, which became final in the Court of Appeal, overturned this computational scheme. The Woolcombers judgement says that where group company A disposes of shares in group company B in consideration for shares issued by group company C, there is an actual disposal by company A of the company B shares. This means that the no gain/no loss rule does operate in relation to the transfer of the company B shares from company A to company C. If the no disposal fiction applies to determine the capital gains result for company A on the share exchange, this does not prevent the operation of the no gain/no loss rule in determining the capital gains cost of the company B shares to company C.