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HMRC internal manual

Stamp Taxes on Shares Manual

HM Revenue & Customs
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Exemptions and reliefs: reliefs: company reconstructions and acquisitions - Section 75 - 'reconstruction'

The term ‘reconstruction’ in FA86/S75(1) is not defined, but it has been held that a scheme for the reconstruction of a company comprises the transfer of the undertaking, or part undertaking, of an existing company to a new company with substantially the same members, and must involve the carrying on by the new company of substantially the same business as that transferred (BrooklandsSelangor Holdings Ltd v IRC [1970] 2 All ER 76 and Baytrust Holdings Ltd v IRC [1971] 3 All ER 76).

For there to be a scheme of reconstruction there must be, at the end, no change in the real ownership, nor fusion into common ownership of what was previously in separate ownership. Neither the split of a company into two parts, the different parts going to separate shareholders, nor the distribution of part of the assets of a company not forming part of its undertaking in the form of shares in a new company is a reconstruction.