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HMRC internal manual

Capital Gains Manual

Share reorganisations: consideration paid: anti- avoidance: considerations

At a practical level it may make little difference whether a subscription for new shares which is not a bargain made at arm’s length is treated as reorganisation or a purchase. If the subscription is a purchase the ordinary rules of TCGA92/S17 will apply to restrict the acquisition cost of the new shares to their market value. The adjustment to the Capital Gains Tax base cost is likely to be very similar to that achieved under TCGA92/S128. See CG53516+ if the shares are issued on the conversion of a loan account.