Section 687 | Income tax advantage

(1)For the purposes of this Chapter a person obtains an income tax advantage if—

(a)the amount of any income tax which would be payable by the person in respect of the relevant consideration if it constituted a ... distribution exceeds the amount of any capital gains tax payable in respect of it, or

(b)income tax would be payable by the person in respect of the relevant consideration if it constituted a ... distribution and no capital gains tax is payable in respect of it.

(2)So much of the relevant consideration as exceeds the maximum amount that could in any circumstances have been paid to the person or an associate of the person by way of a ... distribution at the time when Condition A or B in section 685 is met is to be left out of account for the purposes of subsection (1).

(3)The amount of the income tax advantage is the amount of the excess or (if no capital gains tax is payable) the amount of the income tax which would be payable.

(4)In this section—

(a)distribution” does not include a distribution which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) of CTA 2010 (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company), and

(b)“relevant consideration” has the same meaning as in section 685.