Section 1088 | Meaning of “chargeable payment”

(1)In this Chapter “a chargeable payment” means any payment which—

(a)meets each of conditions A to D in this section, or

(b)is a chargeable payment by virtue of section 1089.

(2)Condition A is that the payment is made by a company concerned in an exempt distribution and is made (directly or indirectly)—

(a)to a member of that company, or

(b)to a member of any other company concerned in the exempt distribution.

(3)Condition B is that the payment is made—

(a)in connection with the shares in the company making the payment,

(b)in connection with the shares in any other company concerned in the exempt distribution, or

(c)in connection with any transaction affecting the shares mentioned in paragraph (a) or (b).

(4)Condition C is that the payment—

(a)is not made for genuine commercial reasons, or

(b)forms part of a tax avoidance scheme.

(5)Condition D is that the payment—

(a)is not a distribution or an exempt distribution, and

(b)is not made to a company that belongs to the same group as the company making the payment.

(6)In this section and section 1089—

“tax avoidance scheme” means a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and

“tax” includes stamp duty and stamp duty land tax.

(7)This section is to be read with section 1089.