If a person exercises control over a company so that value passes out of shares which he (or a person connected with him: see ¶503-800) owns, and passes into other shares, the exercise of control is treated as a disposal of the shares out of which value passes (TCGA 1992, s. 29(2)). This also applies to the exercise of control so that value passes out of rights over the company (TCGA 1992, s. 29(2)).

Example 1

Leslie owns 90 out of 100 £1 ordinary shares in B Co Ltd. His son Pat owns ten shares of the same class.

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