Commentary on Sections Overview Overview Section 711: Identification of shares after disposals
2718.This section is based on paragraph 8 of Schedule 15B to ICTA and sets out the share identification rules for disposals of shares in a VCT.
2719.The first rule (subsection (1)) provides the assumption that non-VCT shares are disposed of before VCT shares.
2720.The second rule (subsection (2)) applies if the annual acquisition limit is exceeded and some shares are disposed of. Clearly an investor will want to know whether the shares falling within the annual acquisition limit are disposed of or whether the other shares (referred to as “excess shares”) are disposed of. The section sets out the assumptions to apply. Shares acquired on an earlier day are treated as disposed of before shares acquired on a later day (see subsection (3)). If the shares are acquired on the same day, excess shares are treated as disposed of first (see subsection (4)).
2721.Subsection (5) is based on section 60 of TCGA, incorporating the rule relating to acquisitions and disposals by a person’s nominee, and acquisitions and disposals between a person and his nominee.