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HMRC internal manual

Capital Gains Manual

Share reorganisations: consideration paid: anti- avoidance

The critical feature of both TCGA92/S17 and TCGA92/S128 is that you have to show the transaction is not a bargain made at arm’s length within the ordinary meaning of those words. You cannot rely upon the connected persons legislation of TCGA92/S18 even if the subscription is treated as a purchase. Section 18 will only apply if there is a disposal and an acquisition. A company does not dispose of an asset when it issues its own shares. Therefore, there is no disposal by the company corresponding to the acquisition by the shareholder.