Taxation of Chargeable Gains Act 1992 section 7AC paragraph 19

Requirements relating to the company invested in

Section 7AC paragraph 19 sets out the conditions that the company whose shares are being sold (the "company invested in") must satisfy for the substantial shareholding exemption to apply to a disposal.

• The company invested in must have been a "qualifying company" — meaning a trading company or the holding company of a trading group or subgroup — throughout the period from the start of the twelve-month substantial shareholding window to the date of disposal.
• Where the disposal is to a connected person or where the substantial shareholding requirement is met through intra-group transfer of trading assets rules, the company invested in must also be a qualifying company immediately after the disposal.
• Where trading assets have been transferred within a group, the company invested in can be treated as having been a trading company during the final twelve-month period when the transferred asset was in use, even if it was not actually a trading company at that time.
• Where a disposal is treated as taking place at an earlier date under contract rules (before the actual conveyance or transfer), the qualifying company conditions must be satisfied both at the deemed disposal date and at the date of the actual conveyance or transfer.