Part 13Tax avoidance
Chapter 1Transactions in securities
F4Person liable to counteraction of income tax advantages
685Receipt of consideration in connection with distribution by or assets of close company
1
The circumstances covered by this section are circumstances where condition A or condition B is met.
2
Condition A is that, as a result of the transaction in securities or any one or more of the transactions in securities, F6a relevant person receives relevant consideration in connection with—
a
the distribution, transfer or realisation of assets of a close company,
b
the application of assets of a close company in discharge of liabilities, or
c
the direct or indirect transfer of assets of one close company to another close company,
and F1the relevant person does not pay or bear income tax on the consideration (apart from this Chapter).
3
Condition B is that—
a
F3a relevant person receives relevant consideration in connection with the transaction in securities or any one or more of the transactions in securities,
b
two or more close companies are concerned in the transaction or transactions in securities concerned, and
c
F7the relevant person does not pay or bear income tax on the consideration (apart from this Chapter).
F83A
In subsections (2) and (3) “relevant person” means—
a
the party, or
b
any person other than the party in relation to whom the condition in section 684(1)(d) is met.
4
In a case within subsection (2)(a) or (b) “relevant consideration” means consideration which—
a
is or represents the value of—
i
assets which are available for distribution by way of dividend by the company, or
ii
assets which would have been so available apart from anything done by the company,
b
is received in respect of future receipts of the company, or
c
is or represents the value of trading stock of the company.
5
In a case within subsection (2)(c) or (3) “relevant consideration” means consideration which consists of any share capital or any security issued by a close company and which is or represents the value of assets which—
a
are available for distribution by way of dividend by the company,
b
would have been so available apart from anything done by the company, or
c
are trading stock of the company.
F26
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7
So far as subsection (2)(c) or (3) relates to share capital other than redeemable share capital, it applies only so far as the share capital is repaid (on a winding up or otherwise); and for this purpose any distribution made in respect of any shares on a winding up or dissolution of the company is to be treated as a repayment of share capital.
F57A
The references in subsection (4)(a)(i) and (ii) to assets do not include assets shown to represent return of sums paid by subscribers on the issue of securities merely because the law of the country in which the company is incorporated allows assets of that description to be available for distribution by way of dividend.
7B
The references in subsections (4)(a)(i) and (5)(a) to assets which are available for distribution by way of dividend by the company include assets which are available for distribution to the company by way of dividend by any other company it controls.
8
References in this section to the receipt of consideration include references to the receipt of any money or money's worth.
9
In this section—
“security” includes securities not creating or evidencing a charge on assets;
“share” includes stock and any other interest of a member in a company.
Ss. 682-687 and cross-headings substituted (8.4.2010 with effect in accordance with Sch. 12 para. 15(1) of the amending Act) for s. 682-694 and cross-headings by Finance Act 2010 (c. 13), Sch. 12 para. 2