751A Exchange of shares held as trading stock.

(1) In this section—

“new holding”, in relation to original shares, and “original shares” have, respectively, the same meanings as in section 584(1).

(2) Subsections (4) and (5) shall apply where a transaction to which this section applies occurs in relation to any original shares—

(a) to which a person carrying on a business consisting wholly or partly of dealing in securities is beneficially entitled, and

(b) which are such that a profit on their sale would form part of the trading profits of that business.

(3) This section applies to any transaction, being a disposal of original shares which, if the original shares were not such as are mentioned in subsection (2) would result in the disposal not being treated as a disposal by virtue of sections 584 to 587; but does not apply to any transaction in relation to which section 751B applies.

(4) Subject to subsection (5), in making any computation in accordance with the provisions of the Tax Acts applicable to trading profits chargeable to tax under Case I of Schedule D—

(a) the transaction to which this section applies shall be treated as not involving any disposal of the original shares, and

(b) the new holding shall be treated as the same asset as the original shares.

(5) Where, under a transaction to which this section applies, the person concerned receives or becomes entitled to receive any consideration in addition to the new holding, subsection (4) shall have effect as if the references to the original shares were references to the proportion of them which the market value of the new holding at the time of the transaction bears to the aggregate of that value and the market value at that time (or, if it is cash, the amount) of that consideration.

(6) Subsections (4) and (5) shall have effect with the necessary modifications in relation to any computation made for the purposes of section 707(4) in a case where the original shares held by the company concerned and the new holding are treated as the same asset by virtue of any of sections 584 to 587.