Mergers, demergers and reorganisations
The rules surrounding reorganisations of share capital and the transactions that are treated as reorganisations of share capital were part of the very earliest legislation charging tax on capital gains, the short-term gains rules introduced by Finance Act 1962. The majority of those rules are replicated in the latest legislation, TCGA 1992, in a virtually unchanged form. Obviously, the rules as a whole have evolved, but it is clear that these rules have been an important part of the capital gains legislation since its earliest inception.
This Tax Digest aims to be a practical guide to the way in which the rules work, from the simplest reorganisations of a company's share capital through to more complex transactions, such as mergers and demergers. Most provisions are illustrated by examples that should make clear both how the transactions proceed and what the tax consequences are. All the examples are based on real-life experiences from 25 years of being involved in these transactions, and the Digest includes practical advice on such areas as applying for clearance from HMRC and computing the capital gains in complex cases.
In this Tax Digest
- A few notes on company law
- Reorganisations of share capital
- Share exchanges
- Exchanges without share capital
- Management buy-outs
- Qualifying corporate bonds and non-qualifying corporate bonds
- Direct demergers
- Schemes of reconstruction
- Capital gains anti-avoidance rules
- Pre-transaction clearances
- Computational issues – ss 129 and 130