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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Deemed loan relationships: shares with guaranteed returns: schemes unwound by 31 December 2005

Relief to allow early unwind of schemes by 31 December 2005

This guidance applies to companies that hold shares up to 21 April 2009

These rules are modified by FA96/S91G(7) & (8) to help companies unwind early schemes in existence when the new legislation was introduced on 16 March 2005. Where a share held before 16 March 2005 became subject to S91A or S91B on that day, and the conditions in those sections cease to be satisfied at any time on or before 31 December 2005, then:

  • the chargeable gain or allowable loss computed in accordance with TCGA92/S116(10)(a) will not crystallise on the occasion of the deemed disposal that occurs when the conditions in S91A or S91B cease to be satisfied, but
  • the share continues to be the ‘new asset’ for the purposes of TCGA92/S116 so that the chargeable gain or allowable loss will accrue on a subsequent disposal of the share.

So if in the example in CFM45290 FA96/S91B had ceased to apply to the share in 2005 rather than in 2006, the chargeable gain on the hypothetical disposal on 16 March 2005 would not have accrued then. Instead that gain would have accrued on the final disposal of the share for 160, together with any chargeable gain that accrued in respect of that disposal.