PART VI VALUATION

CHAPTER III SALE OF SHARES ETC. FROM DECEASED’S ESTATE

183 Changes in holdings.

1

This section applies in any case where, within the period of twelve months immediately following the date of the death in question, there occurs in relation to any qualifying investments comprised in the deceased’s estate immediately before his death (in this section referred to as “the original holding”) a transaction to which F1127 of the 1992 Act applies, that is to say—

a

a reorganisation, within the meaning of section F2126(1) of that Act; or

b

the conversion of securities within the meaning of section F2132 of that Act; or

c

the issue by a company of shares or debentures in exchange for shares in or debentures of another company in such circumstances that section F2135 of that Act applies; or

d

the issue by a company of shares or debentures under such an arrangement as is referred to in section F2136 of that Act;

or any transaction relating to a unit trust scheme which corresponds to any of the transactions referred to in paragraphs (a) to (d) above and to which section F2127 of that Act applies by virtue of section F299 of that Act.

2

Where this section applies, the holding of investments which, as the result of the transaction, constitutes a new holding within the meaning of section F2126(1) shall be treated for the purposes of this Chapter as being the same as the original holding; and references in the following provisions of this section to the new holding shall be construed accordingly.

3

If the appropriate person gives, or becomes liable to give, as part of or in connection with the transaction concerned, any consideration for the new holding or any part of it, then, for the purposes of subsection (5) below, the value on death of the new holding shall be treated as the aggregate of—

a

the value on death of the original holding, and

b

an amount equal to that consideration,

and in any other case the value on death of the new holding shall be taken to be the same as the value on death of the original holding.

4

For the purposes of subsection (3) above, there shall not be treated as consideration given for the new holding or any part of it—

a

any surrender, cancellation or other alteration of any of the investments comprised in the original holding or of the rights attached thereto, or

b

any consideration consisting of any application, in paying up the new holding or any part of it, of assets of the company concerned or of any dividend or other distribution declared out of those assets but not made.

5

If, within the period referred to in subsection (1) above, the appropriate person sells any investments comprised in the new holding, the value on death of those investments shall be determined by the formula—

Vs(H—S)(Vs+Vr)math

where—

  • Vs is the sale value of the investments,

  • Vr is the market value at the time of the sale of any investments remaining in the new holding after the sale,

  • H is the value on death of the new holding, and

  • S is the value on death of any investments which were originally comprised in the new holding but have been sold on a previous occasion or occasions.

6

For the purposes of subsection (5) above the market value of any investments at any time means the value which they would (apart from this Chapter) have for the purposes of this Act if they were comprised in the estate of a person who died at that time.