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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Group share exchanges: exchanges of shares for QCBs

TCGA92/S171 (3) prevents the no gain/no loss rule in TCGA92/S171 (1) from applying to a transaction covered by the no disposal fiction in TCGA92/S127 and TCGA92/S135. The technical analysis is different where the consideration given for a transfer of shares within a group is an issue of qualifying corporate bonds (QCBs). If the relevant conditions are satisfied, the capital gains treatment of an exchange of shares for newly issued QCBs is given by TCGA92/S116, see CG53709+. And the effect of Section 116(5) is to disapply the rules in Sections 127-130. This in turn means that Section 171(3) may not apply to prevent the operation of the Section 171(1) no gain/no loss rule.