Taxation of Chargeable Gains Act 1992 Schedule 5B paragraph 8

Acquisition of share capital by new company

Schedule 5B paragraph 8 deals with what happens to EIS deferral relief when a newly formed company acquires all the shares in an existing qualifying company through a share-for-share exchange.

• When a new company with only subscriber shares acquires all the shares in an old company purely in exchange for issuing its own corresponding new shares proportionally to existing shareholders, and the exchange is not treated as a disposal, deferral relief transfers from the old shares to the new shares.
• Where the individual originally subscribed for and was issued the old shares, the new shares are treated as having been subscribed for and issued at the same time and for the same amount as the old shares, and the original deferral relief claim is treated as having been made in respect of the new shares.
• Where the individual acquired the old shares through a transfer within a marriage or civil partnership, the same treatment applies — the new shares inherit the subscription timing, amount, and deferral relief claim of the old shares.
• All obligations and actions previously carried out by or required of the old company under the deferral relief provisions transfer to the new company, including the right to continue any appeal originally brought by the old company.