IFM16230 - Exchanges, mergers, schemes of reconstruction: collective investment schemes: scheme of reconstruction involving issue of units

Section 103H Taxation of Chargeable Gains Act 1992 (TCGA)

This section applies where investors in CIS바카라 사이트™A바카라 사이트™ exchange units for new units in CIS 바카라 사이트™B바카라 사이트™ where 바카라 사이트˜B바카라 사이트™ is a successor or feeder fund to 바카라 사이트˜A바카라 사이트™. Two conditions must be satisfied:

  • In connection with a scheme of reconstruction, all investors in 바카라 사이트™A바카라 사이트™ 바카라 사이트“ or all investors holding units of a particular class 바카라 사이트“ enter an arrangement, and
  • Under that arrangement, units in 바카라 사이트˜B바카라 사이트™ are issued to those investors in proportion to their holding in 바카라 사이트˜A바카라 사이트™. The 바카라 사이트˜A바카라 사이트™ units may be retained by the investors, or they may be cancelled or otherwise extinguished.

If this section applies:

  • Investors are treated as having replaced their 바카라 사이트˜A바카라 사이트™ units with their holding at the conclusion of the arrangement (either 바카라 사이트˜B바카라 사이트™ units or a mixture of 바카라 사이트˜A바카라 사이트™ and 바카라 사이트˜B바카라 사이트™ units) and the 바카라 사이트˜A바카라 사이트™ units are treated as having been cancelled (even if they are actually retained).
  • Chargeable gains rules apply as if schemes 바카라 사이트˜A바카라 사이트™ and 바카라 사이트˜B바카라 사이트™ were a single company which had reorganised its share capital - see CG51700C. In summary, the exchange of units in 바카라 사이트˜A바카라 사이트™ for units in B바카라 사이트™ is treated as not a disposal for chargeable gains purposes and the 바카라 사이트˜B바카라 사이트™ units are treated as having been acquired at the same time as the original 바카라 사이트˜A바카라 사이트™ units.

Where an interest in units in a non-reporting offshore fund is exchanged or treated as exchanged for an asset which is not an interest in a non-reporting offshore fund, there is a disposal of the interests in the non-reporting offshore fund for a consideration equal to their market value at the time of the exchange. See IFM13284 (corporation tax payers) and IFM13386 & IFM13388 (income tax payers).

Where a reorganisation in terms of case 2 of section 103F (see IFM16210) takes place in advance of the reconstruction, the provisions of section 103H apply to the position after the reorganisation.

Section 103H only applies where the arrangements take place for bona fide commercial reasons and not for the avoidance of tax바카라 사이트“ see IFM16260.

바카라 사이트˜Scheme of reconstruction바카라 사이트™ and 바카라 사이트˜feeder fund바카라 사이트™ are defined in Schedule 5AZA to TCGA 바카라 사이트“ see IFM16250.