Taxation of Chargeable Gains Act 1992 Schedule 5AZA paragraph 5

Preliminary reorganisation of units to be disregarded

Paragraph 5 of Schedule 5AZA provides that where units in an original collective investment scheme are reorganised as a preliminary step before a scheme of reconstruction, the key conditions for tax treatment are assessed by reference to the position after that reorganisation, not before it.

• This paragraph applies where units in an original collective investment scheme are reorganised before a scheme of reconstruction takes place.
• The reorganisation must fall within case 2 of section 103F(1), which deals with exchanges of units in one collective investment scheme for units in another.
• The reorganisation must be carried out for the purposes of the relevant scheme of reconstruction.
• Where these conditions are met, the first and second conditions (which determine whether the reconstruction qualifies for special tax treatment) are tested against the position as it stands after the preliminary reorganisation has been completed.