Taxation of Chargeable Gains Act 1992 section 103I

Scheme of reconstruction involving conversion scheme

Section 103I provides capital gains tax rollover relief when units in one collective investment scheme are converted into units in another collective investment scheme as part of a scheme of reconstruction under the UCITS Regulations.

• Where a scheme of reconstruction involves converting units in one collective investment scheme (scheme C) into units in another (the conversion scheme), the exchange is treated as a tax-neutral reorganisation rather than a disposal
• The standard share reorganisation rules (sections 127 to 131) apply as though both schemes were the same company and the conversion were a reorganisation of its share capital, so no immediate chargeable gain or allowable loss arises
• Conversion holdings are the units in scheme C that are exchanged for units in the conversion scheme in proportion to the participant's existing holding, in accordance with the Undertakings for Collective Investment in Transferable Securities Regulations 2011
• The relief is only available if the scheme of reconstruction is carried out for genuine commercial reasons and does not form part of arrangements the main purpose, or one of the main purposes, of which is the avoidance of tax