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HMRC internal manual

Capital Gains Manual

Company reconstructions: anti-avoidance provisions

Sections 135, 136 and 139 TCGA 1992 ARE ALL SUBJECT TO ANTI-AVOIDANCE PROVISIONS. All decisions on whether to invoke the anti-avoidance provisions are taken in Capital Gains Technical Group. Companies involved in the transactions may ask the Board for advance clearance that the anti-avoidance provisions will not apply. This is obtained from the Clearance and Counteraction Team who can provide details of clearances given and refused. Unless you are dealing with a shareholder who controls a very small shareholding (See CG52664 Note 1) you must check whether clearance has been given.

Section 304A ICTA 1988, introduced by Finance Act 1998, governs the Income Tax consequences of certain share exchanges involving shares which have attracted Business Expansion Scheme relief or Enterprise Investment Scheme Income Tax relief. This section is effectively subject to the anti-avoidance provisions of Section 137(1) TCGA 1992 and companies may ask the Board for advance clearance. In these cases there is no exception from the anti-avoidance provisions for very small shareholdings. For guidance on Section 304A ICTA 1988 see CG56940 and VCM23220+.

If no clearance was sought or the transactions are not as described in the notification of clearance the case owner should make a submission to Clearance & Counteraction Team. If clearance has been refused you should not allow the sections to apply. Any objection by the taxpayer must be referred to that team.  See CG52631 for the contact details.