Section 236P: Events which trigger deemed disposal and reacquisition by trustees, Taxation of Chargeable Gains Act 1992

Where the trustees of a settlement acquire any ordinary share capital in a tax year in circumstances where section 236H applies, subsection (3) applies on the first occasion, after the end of the fourth tax year following the tax year in which the acquisition occurs, when a disqualifying event occurs in relation to the acquisition.

A "disqualifying event" occurs in relation to the acquisition if and when—

C ceases to meet the trading requirement,

the settlement ceases to meet the all-employee benefit requirement,

the settlement ceases to meet the trustee independence requirement,

the settlement ceases to meet the controlling interest requirement,

the participator fraction exceeds 2/5, or

the trustees act in a way which the trusts, as required by the all-employee benefit requirement, do not permit.

Where—

a disqualifying event falling within subsection (2)(ba) occurs (trustee independence requirement ceases to be met),

the event only occurs as a result of—

the death of a trustee of the settlement, or

the death of a director of a company that is a trustee of the settlement, and

within the period of 6 months beginning with that death, the settlement meets the trustee independence requirement,

the disqualifying event is to be ignored.

The trustees are treated as having, immediately before the disqualifying event—

disposed of any ordinary share capital of C held by the trustees which comprises shares acquired in circumstances where section 236H applied (and not subsequently disposed of and reacquired), and

immediately reacquired that ordinary share capital,

at its market value at that time.

See also section 80 (trustees ceasing to be resident in U.K.), which provides for similar consequences in circumstances where the trustees of the settlement cease to be resident in the United Kingdom.

For the purposes of subsection (2)(b)—

unless the settlement met the all-employee benefit requirement at the time of the acquisition by virtue of section 236L, that section does not apply for the purposes of determining whether the settlement continues to meet that requirement after the acquisition, and

if, at the time of the acquisition, the settlement met that requirement by virtue of section 236L and later continues to meet it otherwise than by virtue of that section, it may not again meet the requirement by virtue of that section.

Section 236N(4) applies for the purposes of subsection (2)(d) as it applies in relation to section 236N(2)(b) and (3).

Section 236P: Events which trigger deemed disposal and reacquisition by trustees

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