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HMRC internal manual

Venture Capital Schemes Manual

CVS: deferral relief: company restructuring: reconstruction and amalgamation

FA00/SCH15/PARA82 to PARA85


  • investment relief is attributable to any shares in the issuing company immediately prior to a scheme of reconstruction or amalgamation,
  • those shares have been held continuously by the investing company since they were issued and,
  • as a result of the reconstruction or amalgamation, the shares or securities of another company are issued in exchange for, or in respect of, those shares,

TCGA92/S135 and S136 are disapplied (subject to the exception below). The shares which would have been treated as exchanged for new shares or debentures under S135 or S136 (or would have been so treated if TCGA92/S137(1) did not apply) are treated as being disposed of at the time of the reconstruction or amalgamation.

TCGA92/S135 is not disapplied in certain circumstances where all the shares and securities of the issuing company are exchanged for corresponding shares and securities in a holding company which has previously issued only subscriber shares or other corresponding shares or securities. In these circumstances, the holding company takes the place of the issuing company as far as the CVS rules are concerned. The new shares that are issued in respect of shares to which investment relief is attributable take the place of those old shares, and any claims for investment or deferral reliefs in respect of the old shares are treated as having been made in respect of the new shares. These rules are based closely on the corresponding existing rules for VCTs and the EIS (TCGA92/SCH5B/PARA8, see VCM23230 and the example at VCM23250).