Taxation of Chargeable Gains Act 1992 Schedule 5B paragraph 9

Other reconstructions and amalgamations

Schedule 5B paragraph 9 deals with what happens to EIS deferral relief when shares are affected by a company reconstruction or amalgamation, and sets out the circumstances in which the deferral relief may or may not be preserved.

• When shares carrying EIS deferral relief (but not EIS income tax relief) are involved in a company reconstruction, the reconstruction is normally ignored for the purposes of chargeable events — meaning the deferred gain is triggered
• The deferred gain is not triggered if the new shares received are ordinary shares with no preferential rights to dividends or assets on winding up, no redemption rights, and are issued after the end of the relevant period
• An additional condition must be met: the company issuing the new shares must previously have issued eligible EIS shares and provided the required compliance certificate in respect of those shares
• If the reconstruction falls within the separate rules for reconstructions involving shares that also carry EIS income tax relief (paragraph 8), then paragraph 9 does not apply at all

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