Taxes Consolidation Act 1997 Schedule 9 paragraph 3

Holdings to be taken into account in determining wheter change of ownership has occurred

Schedule 9 paragraph 3 provides that where certain persons hold extraordinary rights or powers in a company, holdings of all kinds of share capital and voting powers — not just ordinary share capital — may be taken into account when determining whether a change of ownership has occurred for the purposes of sections 401 and 679(4).

• Ordinary share capital is the normal test for determining whether a company has changed ownership for the purposes of the loss and capital allowance restriction rules
• Where persons hold extraordinary rights or powers under the company's constitution or other governing documents, ordinary share capital may not be a reliable indicator of who truly controls or benefits from the company
• In such cases, holdings of all kinds of share capital (including preference shares), voting power, or any other special kind of power may be taken into account instead of ordinary share capital
• The purpose is to ensure that a change of ownership cannot be disguised by concentrating control in instruments other than ordinary shares