Annex 1: Minor changes in the law Change 15: Share loss relief: identification of which shares are disposed of: section 76
This change legislates the practice that, if the identification rule in section 576(1) of ICTA identifies that some but not all of the qualifying shares in the mixed holding are disposed of, the rule is also applied to determine which of those shares are disposed of.
This change is the same as that made in section 148(2) of ITA for the purposes of relief against income tax. See Change 28 in Annex 1 to the explanatory notes on ITA.
It is stated explicitly in section 76(2)(b) that the rule as amended by Change 14so applies.
The effect in principle of this change depends on whether the rule as amended results in different shares being identified as disposed of by the taxpayer from those identified under the rule in the source legislation. Identification of different shares may in principle result in the amount of share loss relief available on the disposal in question being less, more or the same and may also affect the relief available on a subsequent disposal. But in practice the qualifying shares disposed of and the proportion of the loss attributable to those shares is determined on a just and reasonable basis. This normally gives the same result as the rewritten legislation (see paragraph 47150 of HMRC’s Venture Capital Schemes Manual).
This change is in principle adverse to some taxpayers and favourable to others. But it is expected to have no practical effect as it is in line with generally accepted practice.