The Exchange Gains and Losses (Alternative Method of Calculation of Gain or Loss) Regulations 1994

Transactions to which section 116 or 127 of the 1992 Act applies

9.—(1) This regulation applies where a transaction occurs to which section 127 of the 1992 Act applies, or would apply but for section 116(1) of that Act and section 116(10) of that Act applies, and as respects which the original shares are or include a matched asset (“the relevant transaction”), and any reference to the original shares and to the new holding shall be construed in accordance with section 126 of that Act.

(2) In any case where this regulation applies there shall be calculated the amount of any chargeable gain or allowable loss which would have been deemed to accrue by virtue of paragraph (6) of regulation 7 if the relevant transaction had been a disposal for the purposes of the 1992 Act as respects which that paragraph applied, and the amount of any such gain or loss is referred to below as the deferred gain or the deferred loss.

(3) If there is a deferred gain, then—

(a) if section 127 applies, in computing the amount of any chargeable gain or allowable loss accruing on a subsequent disposal of the new holding, the consideration received on that disposal of the new holding shall be increased by an amount equal to the amount of the deferred gain;

(b) if section 116 applies and the amount of a chargeable gain or allowable loss which would have accrued at the time of that transaction falls to be calculated under section 116(10)(a), the market value of the matched asset shall for the purposes of section 116(10)(a) of the 1992 Act be increased by an amount equal to the amount of the deferred gain.

(4) If there is a deferred loss, then—

(a) if section 127 applies, in computing the amount of any chargeable gain or allowable loss accruing on a subsequent disposal of the new holding, the consideration received on that disposal of the new holding shall be reduced by an amount equal to the amount of the deferred loss;

(b) if section 116 applies and the amount of a chargeable gain or allowable loss which would have accrued at the time of that transaction falls to be calculated under section 116(10)(a), the market value of the asset shall for the purposes of section 116(10)(a) of the 1992 Act be reduced by an amount equal to the amount of the deferred loss,

and if the amount of the deferred loss exceeds the amount of that consideration or market value, an allowable loss equal in amount to that excess shall be deemed to accrue as respects the new holding at the time of the subsequent disposal.

(5) In any case where section 127 applies, or would but for section 116 apply, in relation to a transaction involving original shares which are or include an asset as respects which paragraph (2), but not paragraph (3), of regulation 8 has applied, then paragraphs (3) and (4) above shall also apply in relation to that asset and the loss or gain deferred under that regulation.

(6) In any case where there is a disposal of part of the asset in question and paragraphs (1) to (5) above apply to that disposal, the amount of any deferred gain or loss shall be apportioned as between the part disposed of and the part retained and those paragraphs shall apply (with any necessary modifications) separately in relation to the different parts.

(1)

Section 116 was amended by section 46(3) of the Finance (No. 2) Act 1992.