32Transactions designed to avoid liability to the profits tax
(1)Where the Commissioners are of opinion that the main purpose or one of the main purposes for which any transaction or transactions was or were effected (whether before or after the passing of this Act) was the avoidance or reduction of liability to the profits tax, they may, if they think fit, direct that such adjustments shall be made as respects liability to the profits tax as they consider appropriate so as to counteract the avoidance or reduction of liability to the profits tax which would otherwise be effected by the transaction or transactions:
Provided that this subsection shall not apply where the transaction or, if there are more than one, all the transactions, was or were completed before the tenth day of April, nineteen hundred and fifty-one.
(2)Without prejudice to the generality of the powers conferred by subsection (1) of this section, the powers conferred thereby extend—
(a)to the charging with the profits tax of persons who, but for the adjustments, would not be chargeable with any tax, or would not be chargeable to the same extent; and
(b)to the charging of a greater amount of tax than would be chargeable but for the adjustments.
(3)If it appears in the case of any transaction or transactions, being a transaction which involves, or transactions one or more of which involve—
(a)the transfer or acquisition of shares in or debentures of a company; or
(b)a change or changes in the person or persons carrying on a trade or business or part of a trade or business; or
(c)a change or changes in the directors of a company the directors whereof have a controlling interest therein,
that, having regard to the provisions of the law relating to the profits tax other than this section which were in force at the time when the transaction or transactions was or were effected, the main benefit which might have been expected, to accrue from the transaction or transactions in the three years immediately following the completion thereof was the avoidance or reduction of liability to the tax, the avoidance or reduction of liability to the profits tax shall be deemed for the purposes of this section to have been the main purpose or one of the main purposes of the transaction or transactions.
(4)Any direction of the Commissioners under this section shall specify the transaction or transactions giving rise to the direction and the adjustments as respects liability to the profits tax which the Commissioners consider appropriate.
(5)No direction shall be given by the Commissioners under this section by reason only—
(a)that, in the case of any body corporate, unincorporated society or other body, no distribution to proprietors has been made or only a smaller distribution than might have been made ; or
(b)that debentures of a company (not being a company the directors whereof have a controlling interest therein) have been issued for full consideration paid in cash to the company,
or by reason of any transaction which, or of any transactions all of which, required and received the consent of the Treasury under section thirty-six of this Act, if the consent was specially given to the transaction or transactions in question, was given before the carrying out thereof, and was given after full and accurate disclosure by the applicants for the consent of all facts and considerations material to be known to the Treasury.
(6)If—
(a)a body corporate, unincorporated society or other body furnishes to the Commissioners particulars of a transaction or transactions effected or to be effected by them; and
(b)the Commissioners are satisfied that the transaction or transactions as described in the particulars have been, or, as the case may be, will be, entered into for bona fide commercial reasons and are such that no direction ought to be given under this section in respect of it or them,
they shall notify the body corporate, unincorporated society or other body accordingly, and thereupon their power to give a direction under this section with respect to the transaction or transactions in question shall cease:
Provided that—
(i)the particulars given under this subsection with respect to any transaction or transactions shall be such as to make full and accurate disclosure of all facts and considerations relating thereto which are material to be known to the Commissioners and, where the requirements of this paragraph of this proviso are not complied with, any notification given by the Commissioners under this subsection shall be void; and
(ii)in no event shall the giving of a notification under this subsection with respect to any transaction or transactions prevent the giving by the Commissioners of a direction under this section with respect to transactions which include that transaction or all or some of those transactions and also include another transaction or other transactions.
(7)Any person aggrieved by a direction of the Commissioners under this section may appeal to the Special Commissioners, whether on the ground that the avoidance or reduction of liability to tax was not the main purpose or one of the main purposes of the transaction or transactions or on the ground that no direction ought to have been given or that the adjustments directed to be made are inappropriate; and all the provisions of the enactments relating to appeals against assessments to the profits tax (including the provisions enabling the Commissioners to make regulations) shall have effect with respect to any appeal to the Special Commissioners under this subsection.
(8)In this section, " debenture " has the meaning assigned to it by section four hundred and fifty-five of the Companies Act, 1948, and " company " and " director " have the same meanings as for the purposes of the Fourth Schedule to the Finance Act, 1937.