Taxes Consolidation Act 1997 Schedule 25A paragraph 2

Effect of deemed disposal and reacquisition

Paragraph 2 provides that a deemed disposal and reacquisition of shares under the Capital Gains Tax Acts breaks the continuity of the holding period for the purposes of the substantial shareholding exemption.

• A "deemed disposal and reacquisition" is a disposal and immediate reacquisition treated as taking place under the Capital Gains Tax Acts.
• Where such a deemed event occurs, the company is not regarded as having held the shares throughout the period spanning the deemed disposal.
• The rule applies both to the shares themselves and to any shares from which they are derived.
• An example of a triggering event is where an investee company leaves a group within 10 years of a reconstruction or amalgamation.