Section HM 75 — Income Tax Act 2007: Transition: treatment of shares held in certain companies

HM 75 Transition: treatment of shares held in certain companies When subsection (2) applies (1) Subsection (2) applies when— (a) an entity chooses to become a PIE; and (b) before the election takes effect— (i) the entity holds a share in relation to which the proceeds of disposal would be excluded income under section CX 55(3)(a) and (b) (Proceeds from disposal of investment shares) once the entity becomes a PIE: (ii) the entity is a share supplier in a returning share transfer in relation to that type of share; and (c) the share is in a company that is not a PIE and does not become a PIE within 6 months from the date on which the entity became a PIE. Disposal and reacquisition (2) The entity is treated as— (a) disposing of the share to another person; and (b) receiving consideration of an amount that equals the market value of the share at the time; and (c) reacquiring the share from the other person for the same consideration. Timing (3) The disposal and reacquisition is treated as occurring on the day before that on which the election takes effect. When subsection (5) applies (4) Subsection (5) applies when an entity— (a) loses PIE status under any of sections HM 24 to HM 28 or chooses to cancel PIE status under section HM 29 ; and (b) holds a share in relation to which the proceeds of disposal would be excluded income under section CX 55(3)(a) and (b) while the entity is a PIE. Disposal and reacquisition (5) The entity is treated as— (a) disposing of the share to another person; and (b) receiving consideration of an amount that equals the market value of the share at the time; and (c) reacquiring the share from the other person for the same consideration. Timing (6) The disposal and reacquisition is treated as occurring on the day before PIE status is lost. Defined in this Act: amount , company , exempt income , market value , PIE , returning share transfer , share , shareholder Compare: 2007 No 97 ss HL 13(3), HL 15(3) Section HM 75: inserted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 292(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).