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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Share reorganisations: consideration paid: anti- avoidance

TCGA92/S128 (2)This loophole was blocked for reorganisations which occur on or after 10 March 1981 by what is now the second part of TCGA92/S128 (2). The subsection only applies if the consideration for the reorganisation is given otherwise than by way of a bargain made at arm’s length. This requirement means that the anti-avoidance provisions in TCGA92/S128 (2) will not apply very frequently in practice. For advice on the meaning of the phrase `bargain made otherwise than at arm’s length’ see CG14540+. This would not apply to normal rights issues by a quoted company. In the context of reorganisations the facts of Dunstan v Young, Austen & Young Ltd and CIR v Burmah Oil Company Ltd (54TC200) give good examples of the type of case you should be looking for.