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In response to an exchange offer by Royal Dutch Shell of two ‘A’ shares for every share in Royal Dutch the taxpayer obtained 2 640 ‘A’ shares.
He reported the exchange in his 2005/06 tax return stating that TCGA 1992 s 135 applied.
HMRC opened an enquiry into the return. They concluded that s 135 did not apply and assessed him to capital gains tax. The department said there had been no issue as specified in s 135(2) by Royal Dutch Shell of shares to the taxpayer in exchange for his shares in Royal Dutch.
The tribunal judge found that the taxpayer did not own any shares in Royal Dutch Shell until he accepted the offer and the ‘A’ shares were transferred to him.
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