Subject to sections 128 to 130, a reorganisation shall not be treated as involving any disposal of the original shares or any acquisition of the new holding or any part of it, but the original shares (taken as a single asset) and the new holding (taken as a single asset) shall be treated as the same asset acquired as the original shares were acquired.
Definitions used in section 127 8
- reorganisation
(1) For the purposes of this section and sections 127 to 131 “reorganisation” means a reorganisation or reduction of a company’s share capital, and in relation to the reorganisation—
(a) “original shares” means shares held before and concerned in the reorganisation,
(b) “new holding” means, in relation to any original shares, the shares in and debentures of the company which as a result of the reorganisation represent the original shares (including such, if any, of the original shares as remain).
Defined in s.126(1) · see it in the full Act- original shares
(4) In sub-paragraph (1) “original shares” and “new holding” shall be construed in accordance with sections 126, 127, 135 and 136.
Defined in Sch.7AC para.14(4) · see it in the full Act(a) “original shares” means shares held before and concerned in the reorganisation,
Defined in s.126(1) · see it in the full Act- the original shares
(4) Sub-paragraph (5) applies if corresponding bonus shares are issued in respect of all or some of the relevant SEIS shares (“the original shares”) to which relief is attributed under this paragraph.
Defined in Sch.5BB para.4(4) · see it in the full Actand in paragraph (b) above “the original shares” and “the new holding” have the same meaning as they have for the purposes of sections 127 to 130.
Defined in s.116(1) · see it in the full Act- the new holding
and in paragraph (b) above “the original shares” and “the new holding” have the same meaning as they have for the purposes of sections 127 to 130.
Defined in s.116(1) · see it in the full Act- new holding
(5) In sub-paragraph (2) above “new holding” shall be construed in accordance with sections 126, 127, 135 and 136.
Defined in Sch.5B para.9(5) · see it in the full Act(b) “new holding” means, in relation to any original shares, the shares in and debentures of the company which as a result of the reorganisation represent the original shares (including such, if any, of the original shares as remain).
Defined in s.126(1) · see it in the full Act(4) In sub-paragraph (1) “original shares” and “new holding” shall be construed in accordance with sections 126, 127, 135 and 136.
Defined in Sch.7AC para.14(4) · see it in the full Act- the single asset
(a) the company’s interest in relevant assets of the partnership is treated as a single asset (“the single asset”) acquired by the company when it became a member of the partnership, and
Defined in Sch.7AD para.3(2) · see it in the full Act- assets
(a) the reference to “assets” were a reference to “property”, and
Defined in Sch.4ZA para.22(2) · see it in the full Act- asset
In this sub-paragraph “asset” includes part of an asset.
Defined in Sch.8B para.6(1) · see it in the full Act
Cases considering section 127 7
Hancock and another v Commissioners for Her Majesty’s Revenue and Customs
Its single-asset fiction did not require different classes of securities to be treated as undergoing one conversion. Section 132 required the provision to operate with necessary adaptations (see paras [5]; [23]).
Hancock & Anor v Revenue & Customs
Section 127's no-disposal and same-asset fictions defer a latent gain. When applied to conversions through section 132, those fictions had to be restricted so they could not transfer a non-QCB gain into an exempt QCB. (see [18]-[19]; [63]-[71])
Harding v Revenue & Customs
The court treated section 127 as ordinarily preventing an immediate disposal on exchange and carrying the old asset’s acquisition date and cost into the new asset. (see paras [21]; [32])
- Unilever (UK) Holdings Ltd v Inspector of Taxes
- Harding v HM Revenue & Customs
- Snell v HM Revenue & Customs
- Delinian Limited v The Commissioners for HMRC
What each judgment says about section 127 is in the case-law panel in the full Act.
Amendments and notes
16 notes from legislation.gov.uk
Modifications
- C207Ss. 127-131 excluded (24.7.1996) by Broadcasting Act 1996 (c. 55), s. 149(1), Sch. 7 para. 7(1)(a) (with Sch. 7 para. 9(1))
- C208Ss. 127-131 restricted by The Personal Equity Plan Regulations 1989 (S.I. 1989/469), reg. 27(3) (as substituted (with effect in accordance with reg. 1(3) of the amending S.I.) by S.I. 1998/1869, regs. 1(1), 12)
- C209Ss. 127-131 restricted (6.4.1999) by The Individual Savings Account Regulations 1998 (S.I. 1998/1870), regs. 1, 34(4)
- C210S. 127 applied (with effect in accordance with s. 63(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 15 para. 80(1)
- C211S. 127 modified (with effect in accordance with s. 63(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 15 para. 84(2) (with s. 84(1))
- C212Ss. 127-130 excluded (with effect in accordance with s. 63(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 15 para. 81(1)
- C213Ss. 127-130 excluded (28.7.2000) by Finance Act 2000 (c. 17), Sch. 14 para. 58
- C214S. 127 modified (with effect in accordance with s. 63(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 15 para. 93(7)
- C215Ss. 127-130 applied by Finance Act 1996 (c. 8), s. 93B(3)(a) (as inserted (with effect in accordance with Sch. 11 paras. 7, 8 of the amending Act) by Finance Act 2002 (c. 23), s. 77(1) (with s. 77(2)))
- C216Ss. 127-130 excluded (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 2 para. 88 (with Sch. 7)
- C217S. 127 applied (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), ss. 462(2), 723 (with Sch. 7)
- C218S. 127 excluded (with effect in accordance with reg. 1(2) of the amending S.I.) by The Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964), regs. 1(1), 66(1)
- C219S. 127 restricted (with effect in accordance with art. 1(2)(3), Sch. 1 of the affecting S.I.) by The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), regs. 1(1), 37
- C220Ss. 127-131 applied by The Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964), regs. 69Z24E(2), 69Z24F(3) (as inserted (1.8.2012) by S.I. 2012/1783, regs. 1, 4)
- C221S. 127 modified by Income Tax Act 2007 (c. 3), s. 257TA(6) (as inserted (17.7.2014) by Finance Act 2014 (c. 26), Sch. 11 para. 1)
- C222Ss. 127-131 applied (with modifications) (with application in accordance with Sch. 3 para. 5(1)-(3) of the amending Act) by Finance Act 2020 (c. 14), Sch. 3 para. 5(7)(a)