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FO 6: Cancellation of shares
or “How shares are treated when companies merge and cancel existing shares”
You could also call this:

“Income received after companies combine is treated as if the original company still existed”

When a company stops existing because it joins with another company, there might be money that comes in after they’ve joined together. This money might be because of something the old company did or didn’t do before it joined up.

If this happens, the new joined-up company gets this money. The new company has to count this money as income if the old company would have had to count it as income if it was still around. There’s a special rule about this in section CV 4 of the law.

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Next up: FO 8: Bad debts and expenditure or loss on resident’s restricted amalgamation

or “Tax deductions for bad debts and losses when companies merge”
Next

Part F Recharacterisation of certain transactions
Amalgamation of companies

FO 7Income derived after amalgamation

  1. This section applies when an amalgamating company ends its existence on amalgamation, and an amount is derived by the amalgamated company after the amalgamation as a result of something that the amalgamating company did or did not do.

  2. The amount is income of the amalgamated company under section CV 4 (Amalgamated companies: amount derived after amalgamation) if it would have been income of the amalgamating company but for the amalgamation.

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