188ÌåÓý

Throughout this manual, all legislative references are to (“TCGA92â€�) unless otherwise stated.Ìý

S236R TCGA92 and Sch 37, Para 3(f) Finance Act 2014ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

In the same way as the occurrence of a ‘disqualifying eventâ€� may result in the withdrawal or prevention of relief given under S236H, a ‘disqualifying eventâ€� may also prompt withdrawal or prevention of relief given under S236Q, seeÌýCG67865.Ìý The relationship between S236Q and S236R parallels that of S236H and S236O.Ìý

Where a deemed disposal of the kind described inÌýCG67865Ìýarises, and the relevant ‘relief requirementsâ€� are met, but a ‘disqualifying eventâ€� in relation to that deemed disposal takes place in the four tax years following that in which the deemed disposal occurs, or for disposals before 30 October 2024, the tax year following the disposal, the consequences are outlined below.Ìý

• ÌýNo claim for relief may be made by the ‘transferring trusteesâ€� on or after the day on which it takes place.Ìý

• ÌýWhere the ‘transferring trusteeâ€� has made a claim for relief and a ‘disqualifying eventâ€� then occurs, the claim is revoked and the chargeable gains and allowable losses of any person, for any chargeable period, are to be calculated as if the claim had never been made.Ìý Adjustments to be made in respect of any person in order to give effect to the change may be made at any time, regardless of the time limits that would otherwise apply.Ìý

If more than one ‘disqualifying eventâ€� occurs, the date of the first to take place is the relevant date for the purposes of the paragraphs above.Ìý

The definition of ‘disqualifying eventâ€� is similar to that inÌýCG67860, but with the substitution of deemed disposal for disposal.Ìý However, references to C should be read as meaning the company mentioned in the first bullet ofÌýCG67865, and those to ‘settlementâ€� should be read as references to the settlement whose trustees are the ‘acquiring trusteesâ€�.Ìý

When deciding whether there has been a ‘disqualifying eventâ€� on the grounds that the trust has ceased to meet the ‘all-employee benefit requirementâ€�, bear in mind that,Ìý

• the settlement cannot be treated as meeting the ‘all-employee benefit requirementâ€� after the time of the disposal unless it was treated as meeting the requirement at that time,Ìý
• if at the time of the disposal the settlement was treated as meeting the ‘all-employee benefit requirementâ€� and then later actually meets it, the settlement cannot again be treated as meeting the requirement, andÌý
• the ‘participator fractionâ€� exceeding two-fifths is to be disregarded ifÌý
• the period that it does so lasts no more than 6 months andÌý
• the fraction exceeded two-fifths during that period by reason of events outside the reasonable control of the trustees.Ìý

The guidance above does not apply where the transitional rules take effect.Ìý

Example 31Ìý

On 15 October 2014 the trustees of the Enif Widgets Limited EOT became absolutely entitled as against the trustees of the Enif Widgets Limited EBT to 65% of the ordinary share capital of Enif Widgets Limited.Ìý The four relevant relief requirements were met at the time and the trustees of the Enif Widgets Limited EBT intended to make a claim for relief.Ìý

Enif Widgets Limited ceases to trade on 24 December 2015 and so the ‘trading requirementâ€� is no longer met.Ìý The trustees of the EOT are treated as having disposed of and immediately reacquired at market value, immediately before the disqualifying event, the company’s shares to which they became absolutely entitled on 15 October 2014.Ìý The trustees of the EOT cannot make a claim for relief on or after 24 December 2015.Ìý Any claim made before that date is revoked and chargeable gains and losses are to be calculated as if it had never been made.Ìý

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