Corporation Tax Act 2010 section 88

Substitution of new shares for old shares

Section 88 explains how the share loss relief rules in sections 79 to 85 continue to apply when old shares have been exchanged for new shares under a qualifying share exchange (as described in section 87).

• Where a company (the investor) originally subscribed for old shares that have been exchanged for new shares, the new shares are treated as if the investor had subscribed for them at the same time and for the same amount as the old shares.
• The new shares are treated as having been issued by the new company at the time the old company originally issued the old shares to the investor.
• Any requirements of the share loss relief rules that were satisfied by the old company before the exchange are treated as having been satisfied by the new company at the same time.
• This treatment does not extend to the definition of "excluded activities" under section 195(7) of ITA 2007 as applied by section 79(7), which must be assessed on its own terms.