Taxation of Chargeable Gains Act 1992 Schedule 7AC paragraph 4

Application of exemptions in priority to provisions deeming there to be no disposal etc

Section 4 of Schedule 7AC establishes that the substantial shareholding exemption takes priority over other provisions in the Taxation of Chargeable Gains Act 1992 that would otherwise deem certain transactions not to be disposals at all.

• When testing whether the substantial shareholding exemption applies, you must disregard the "no disposal" rules that normally apply to share reorganisations, conversions of securities, and certain distributions
• Where the exemption does apply, it overrides those "no disposal" rules, meaning the transaction is recognised as an exempt disposal rather than being treated as if no disposal occurred
• An exception exists where applying this priority rule would cause Corporate Venturing Scheme investment relief to be withdrawn or reduced — in that case, the normal "no disposal" rules continue to apply instead
• Where the exemption displaces the share reorganisation rules that would otherwise have applied under the Corporate Venturing Scheme share exchange provisions, the associated attribution of relief to new shares also ceases to apply