CTM36835 | Particular topics: transactions in securities: Corporation Tax advantage
From HM Revenue & Customs · Company Taxation Manual
, S731 to S751, sets out the legislation that provides for counteracting Corporation Tax advantages obtained or obtainable by companies in respect of a transaction or transactions in securities.
Corporation Tax advantage means
a relief from Corporation Tax, or increased relief from Corporation Tax,
a repayment of Corporation Tax or increased repayment of Corporation Tax,
the avoidance or reduction of a charge to Corporation Tax or an assessment to Corporation Tax, or
the avoidance of a possible assessment to Corporation Tax.
The provision applies in respect of a transaction or transactions in securities if the company is in a position to obtain or has obtained a Corporation Tax advantage in circumstances where the avoidance of tax is effected
by receipts accrued in such a way that the recipient does not pay or bear Corporation Tax on them, or
by a deduction in calculating profits or gains.
The provisions to be applied are
– receipt of consideration representing company assets, future receipts or trading stock (‘circumstance C’)
– receipt of consideration in connection with relevant company distribution (‘circumstance D’)
– receipt of assets of relevant company (‘circumstance E’).
does not apply to a company in respect of a transaction in securities if the company shows that the transaction or transactions meet conditions A and B.
Condition A – the transaction is or the transactions are effected for genuine commercial reasons or in the ordinary course of making and managing investments.
Condition B – the main object or one of the main objects of the transaction or transactions is not enabling a Corporation Tax advantage or corporation tax advantages to be obtained.
For Corporation Tax purposes, clearance notification is given under .