Taxation of Chargeable Gains Act 1992 section 138

Procedure for clearance in advance

Section 138 establishes a voluntary advance clearance procedure that allows companies to confirm with HMRC, before a share exchange or scheme of reconstruction takes place, that the anti-avoidance restrictions will not block the normal tax-neutral treatment of the transaction.

• Either the target company or the acquiring company may apply in writing to HMRC before the new shares or debentures are issued, seeking confirmation that the transaction is for genuine commercial reasons and is not part of a tax avoidance arrangement.
• HMRC has 30 days from receiving the application (or from receiving any additional information requested) to notify the applicant of its decision, and may request further particulars within that period.
• If HMRC refuses clearance or fails to respond within the required timeframe, the applicant has 30 days to refer the matter to the First-tier Tribunal, whose decision then stands in place of HMRC's.
• Any clearance given is void if the application did not fully and accurately disclose all facts and considerations material to the decision.