STSM042360 | Exemptions and reliefs: reliefs: company reconstructions and acquisitions - 'bona fide commercial reasons' and 'tax avoidance'

A condition for relief under section 75 or 77 FA1986 depends on the acquisition being effected for bona fide commercial reasons and not forming part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to Stamp Duty, SDRT (section 77 only), Income Tax, Corporation Tax or Capital Gains Tax.

HMRC accepts that this condition is satisfied where advance clearance for the scheme under section 138 or 139 of the Taxation of Chargeable Gains Act 1992, section 701 Income Tax Act 2007, or section 748 Corporation Tax Act 2010 has been obtained and the details given therein accurately reflect the events which actually took place. Copies of the clearance correspondence should be submitted with the claim. Details of how direct tax clearance can be obtained are available on GOV.UK.

If clearance has not been obtained, then additional information will need to be provided when the claim is submitted – see STSM042450.

Update following the Finance Act 2026

The Capital Gains Tax anti-avoidance rules for share exchanges and company reconstructions were amended by FA2026. HMRC will continue to treat clearances issued under the revised rules as satisfying section 75(5)(a) and 77(3)(c) FA1986, as detailed above.