Article Summary
This guidance note explains the tax relief available for company reconstructions involving share issues or business transfers. It is aimed at tax professionals advising on such transactions. For share reconstructions, tax relief applies where a company issues shares or debentures to shareholders in exchange for their existing shares or debentures, provided this is done as part of a scheme of reconstruction. The shareholders are treated as exchanging their existing shares, with the share reorganisation rules then applying. Relief extends beyond just ordinary shareholders.For business transfers, tax relief applies where a company transfers all or part of its business to another company, provided the transferor receives no consideration other than the transferee taking on liabilities. The companies are treated as acquiring/disposing of the assets for no gain/loss. Relief covers transfers to EEA companies, with deferred tax possible. In both cases the reconstruction must have bona fide commercial purposes. Clearances can be obtained. Understanding these reliefs will be relevant for advising on upcoming reconstructions.