Corporation Tax Act 2009

532 The associated transactions condition

(1) The associated transactions condition is that there is a scheme or arrangement (whether or not the investing company is a party to it) under which the share and one or more associated transactions are together designed to produce a return for any one or more persons which equates, in substance, to the return on an investment of money at a commercial rate of interest.

(2) But the associated transactions condition is not met if—

(a) the increasing value condition is met as respects the share or would be apart from section 527(3) (exception for income-producing assets), or

(b) the redemption return condition is met as respects the share or would be apart from section 529(1)(c) (excepted shares).

(3) In this section “associated transaction” includes—

(a) entering into or acquiring rights or liabilities under any of the kinds of contract specified in subsection (4), and

(b) acquiring rights or receiving benefits in respect of other shares.

(4) The contracts referred to in subsection (3) are—

(a) a derivative contract,

(b) a contract which would be a derivative contract, apart from section 591(3),

(c) a contract having a similar effect to a contract within paragraph (a) or (b), or

(d) a contract of insurance or indemnity.