VCM75120 | Share loss relief: individual and corporate claimants: individual claimants: type of company invested in: qualifying trading company: condition D: relationship of issuing company to UK

Condition D was one of the four conditions (A-D) that needed to be met by a company in order for it to be a qualifying trading company, and hence for its shares to be qualifying shares for Share Loss Relief purposes (assuming Enterprise Investment Scheme relief is not attributable to them). Condition D was repealed for disposals of shares made on or after 24 January 2019.

If you receive a share loss relief claim where the claimant is seeking to argue that Condition D shouldn’t apply to a share disposal made before 24 January 2019 then please make a submission to the Capital Gains Technical Group, following the guidance on the Contacting Us page on the Capital Gains Network SharePoint site.

How Condition D applied before 24 January 2019

Condition D applied where the disposal of shares was made before 24 January 2019 – ITA07/S134(5) for individual claimants and CTA10/S78(5) for corporate claimants. The company must have carried on its business wholly or mainly in the UK throughout the period ending with the date of disposal of the shares and beginning with the incorporation of the company or (if later) twelve months before the shares in question were issued.

Before ITA 2007 and CTA 2010, the precursor to Condition D was at ICTA88/S576(4)(c). In relation to shares issued on or after 6 April 1998 it imposed effectively the same conditions on the issuing company.

In relation to shares issued before 6 April 1998 the corresponding condition was that the issuing company was resident in the United Kingdom from its incorporation to the date of disposal of the shares.