Taxation of Chargeable Gains Act 1992 section 140DA

Securities issued on division of business

Section 140DA provides rollover relief for shareholders who receive securities when a company divides part of its business across borders, by treating the transfer as a scheme of reconstruction so that no immediate chargeable gain arises.

• Where a company transfers part of its business to one or more companies under section 140A(1A) or 140C(1A), and the transferor and transferee(s) are each resident in a relevant state but not all in the same state, and the transfer is not already a scheme of reconstruction under section 136, this section applies
• The section prevents what would otherwise be a part disposal by shareholders or debenture holders of their holdings in the transferor company, which would trigger an unwanted chargeable gain
• Where the conditions are met, the transfer is treated as if it were a scheme of reconstruction for the purposes of section 136, thereby allowing the rollover treatment under section 127 to apply so that no immediate charge to capital gains tax arises
• The anti-avoidance restrictions in section 136(6) and section 137 are disapplied where section 136 applies by virtue of this section