Income Tax Act 2007 Schedule 2 paragraph 41

Ceasing to meet trading requirement because of administration or receivership

Schedule 2 paragraph 41 sets out transitional modifications to the rules in section 138 that protect share loss relief when a company ceases to meet the trading requirement solely because it has entered administration or receivership, with different rules applying depending on when the shares were issued.

• For shares issued before 17 March 2004, section 138 applies in a simplified form that removes references to subsidiaries and makes other minor wording adjustments, so the protection only covers the company itself rather than any group structure.
• Where an administration order was sought by a petition presented before 15 September 2003, the relevant trigger event is the making of the administration order itself, rather than the appointment of an administrator under later insolvency procedures.
• For shares issued before 21 March 2000, the administration and receivership protection in section 138(1) and (2) does not apply at all — though shares issued between 6 April 1998 and 21 March 2000 that had EIS relief or TCGA 1992 Schedule 5B re-investment relief attributed to them immediately before 21 March 2000 are treated as if they were issued on or after that date, thereby bringing them within the protection.
• Section 138 has no application whatsoever to shares issued before 6 April 1998, meaning no administration or receivership protection is available for those earlier share issues.