739H Investment undertakings: reconstructions and amalgamations

(1), (1A), (1B) & (2) This section provides that where, in furtherance of a scheme of reconstruction or amalgamation, an investment undertaking transfers to another investment undertaking, or a sub–fund in one umbrella fund transfers to a sub-fund in another umbrella fund on or after 13 March 2008, all its assets and liabilities in exchange for units (new units) being issued by that other undertaking to unit holders of the first mentioned undertaking, the cancellation of the original units will not give rise to a chargeable event. However, the cost and date of acquisition of those new units will be taken to be the cost and date of acquisition of the original units. The exchange between sub-funds of different umbrella funds will only qualify for relief where it is effected for bona fide commercial reasons and not primarily for tax avoidance purposes.

(3) The provisions of the section also apply to Common Contractual Funds (CCFs) established pursuant to the Investment Funds, Companies and Miscellaneous Provisions Act 2005 – i.e. such CCFs may reconstruct or amalgamate with each other without giving rise to a tax charge.

Relevant Date: Finance Act 2019