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IHTA 1984, s 98 provides that the following are treated as a disposition made by the participators of a close company¹:

1. Ìý

   •ÌýÌýÌýÌý any alteration in, or extinguishment² of, that company's unquoted share or loan capital³, or

2. Ìý

   •ÌýÌýÌýÌý any alteration in, or extinguishment⁴ of, rights attaching to any shares in, or debentures of, that company which are unquoted⁵

'Unquoted' here means not listed on a recognised stock exchange⁶. Shares listed on the Alternative Investment Market (AIM) are treated as unquoted⁷. Both tiers of the NASDAQ stock market were accorded 'recognised stock exchange' status by HMRC from 10 March 1992. For a list of stock exchanges recognised by HMRC see HMRC Recognised stock exchanges.

IHTA 1984, s 98 therefore catches two different types of transaction.

Firstly, the alteration of the company's share capital, for example allowing the intended beneficiary to subscribe for shares at par when the shares already in existence carry a premium.

Secondly, the