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HMRC internal manual

Capital Gains Manual

Company reconstructions: company: TCGA92 S139: position where shares issued before 17 April 2002

The conditions for TCGA92/S139 to apply were broadly the same as those set out at CG52803 with the important difference that scheme of reconstruction or amalgamation was not defined (see CG52730).

For transfers before 1 April 2000, it was also necessary that at the time of the transfer both companies were resident in the UK.

Because the conditions for TCGA 92/S139 to apply were not specifically linked to TCGA 92/S136 it was possible for TCGA 92/S139 to be used on its own to demerge a business.


Mr Jones owns all the shares in Jones Ltd, a Company that has 2 trades. Later, he sets up Jones Associates Ltd, which he also owns.

Mr Jones decides that one of the 2 trades carried on by Jones Ltd belongs more properly with Jones Associates Ltd.

Jones Ltd transfers this trade with all its assets and liabilities to Jones Associates Ltd. Jones Associates Ltd pays no consideration to Jones Ltd. As both companies have substantially the same shareholders and the business as a whole is still carried on Section 139 can apply to the transfer, which is treated as giving rise to no gain/no loss. But Section 136 does not apply because there is no issue of shares or debentures by Jones Associates Ltd to the members of Jones Ltd (Mr Jones).