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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Deferred consideration: shares and securities: normal rules

If a company issues its own shares or debentures in exchange for the shares or debentures in another company the normal rules are

  • provided certain conditions are satisfied TCGA92/S135 applies to treat the exchange as a share reorganisation. There is no disposal of the old shares or debentures. The new shares or debentures inherit the acquisition cost and date of the old shares or debentures. For further instructions see CG52521 onwards
  • if the debentures issued by the company are QCBs the treatment is different but there is still no immediate charge to tax. You have to compute the gain that would have arisen if the old shares or debentures had been sold at their market value. That gain is then released on a later disposal of the QCBs. For further instructions see CG53709 onwards

See CG58020 if the deferred consideration is ascertainable and CG58021 if the deferred consideration is unascertainable.