Finance Act, 1984

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Replacement capital.

19.—(1) An individual to whom subsection (2) applies is not entitled to relief in respect of any shares in a company where, at any time in the relevant period, the company or any of its subsidiaries—

(a) begins to carry on as its trade or as a part of its trade a trade which was previously carried on at any time in that period otherwise than by the company or any of its subsidiaries; or

(b) acquires the whole, or greater part, of the assets used for the purposes of a trade previously so carried on.

(2) This subsection applies to an individual where—

(a) any person or group of persons to whom an interest amounting in the aggregate to more than a half share in the trade (as previously carried on) belonged, at any time in the relevant period, is a person, or a group of persons, to whom such an interest in the trade carried on by the company or any of its subsidiaries belongs or has, at any such time, belonged; or

(b) any person or group of persons who controls or, at any such time, has controlled the company is a person, or a group of persons, who, at any such time, controlled another company which previously carried on the trade;

and the individual is that person or one of those persons.

(3) An individual is not entitled to relief in respect of any shares in a company where—

(a) the company comes to acquire all of the issued share capital of another company, at any time in the relevant period; and

(b) any person or group of persons who controls or has, at any such time, controlled the company is a person, or a group of persons, who, at any such time, controlled that other company;

and the individual is that person, or one of those persons.

(4) For the purposes of subsection (2) —

(a) the person or persons to whom a trade belongs and, where a trade belongs to two or more persons, their respective shares in that trade shall be determined in accordance with subsections (11) (a) and (b), (12) and (13) of section 20 of the Corporation Tax Act, 1976 ; and

(b) any interest, rights or powers of a person who is an associate of another person shall be treated as those of that other person.

(5) In this section—

“subsidiary” means a subsidiary of a kind which a qualifying company may have by virtue of section 26 ; and

“trade” includes any business, profession or vocation and references to a trade previously carried on include references to part of such a trade.