A transaction at an undervalue (TUV) claim can only be brought by a trustee in bankruptcy (trustee). Section 339 of the Insolvency Act 1986 (IA 1986) provides that for the court to declare that a transaction was a TUV and grant relief the following conditions must be satisfied: • the debtor has been adjudged bankrupt • the debtor entered into a transaction at an undervalue in the five years ending with the day of the making of the bankruptcy application as a result of which the debtor was made bankrupt or the date of the presentation of the petition on which the debtor was made bankrupt • at the time when the transaction was entered into the debtor was insolvent or became insolvent as a result of entering into the transaction. However, if the transaction occurred in the two years preceding bankruptcy it is unnecessary to prove insolvency The transaction A debtor enters into a TUV with a person where: • the debtor makes a gift to

This Flowchart sets out the conditions that must be satisfied for the court to declare that a transaction was at an undervalue and grant relief. It should be read alongside Practice

Restructuring & Insolvency analysis: This judgment concerned two sets of legal proceedings connected to allegations of serious dishonesty, fraudulent activity and abusive litigation tactics by various parties to obstruct the enforcement of a judgment. Dr Smith and Mr Ruhan had been long-term adversaries in prolonged and bitter litigation against each other. However, they formed the ‘unholiest of unholy alliances’ in colluding in a scheme to frustrate Hotel Portfolio II UK Ltd’s (HPII’s) efforts to enforce a judgment obtained against Mr Ruhan for £102.26m. The scheme included companies controlled by Dr Smith fabricating litigation against Mr Ruhan leading to a default judgment for £850m, a fabricated settlement agreement and the transfer of assets to entities controlled by Dr Smith. The court found that the transactions were transactions at undervalue under section 423 of the Insolvency Act 1986 (IA 1986), set aside the fraudulent default judgment, struck out the sham proceedings and issued injunctions to protect HPII’s judgment rights against further tortious interference. Written by Justin Perring, barrister, New Square Chambers.

A transaction, which is at an undervalue and was entered into for the purpose of putting assets beyond the reach of, or otherwise prejudicing the interests of, creditors under the Insolvency Act 1986, s 423.

This Flowchart sets out the requirements for a transaction defrauding creditors. It should be read alongside Practice Note: Transactions

Restructuring & Insolvency analysis: The Court held that a judgment creditor was entitled to an order under section 423 of the Insolvency Act 1986 (IA 1986) that the recipient of a Central London property worth £100m from the judgment debtor transfers it to the judgment creditor in part satisfaction of a debt. Such an order under IA 1986, s 423 would avoid further execution costs and was appropriate since the value of the property, although substantial, was considerably less than the judgment debt. A claim the recipient of the property may have against the judgment debtor for loss caused by the transfer of the property to the judgment creditor was not a bar to the order being made. The judicial basis for such a claim had not been articulated and there was no reason to believe that the judgment creditor would be unable to satisfy any claim the recipient may have against it. Written by Adam Stanley, associate at Addleshaw Goddard LLP.

Section 423 of the Insolvency Act 1986 (IA 1986) allows for the avoidance of transactions which were designed to defraud creditors. Its provisions are intended to prevent parties from disposing of assets so as to frustrate creditors. A claim can be brought under IA 1986, s 423 against a company or individual following a transaction at an undervalue (TUV) which was undertaken with the purpose of putting assets beyond the reach of creditors. While there are similarities with a TUV under IA 1986, s 238 (in the context of corporate insolvency) and IA 1986, s 339 (in the context of personal insolvency), these are the key differences: • recovery under IA 1986, s 423 does not necessarily involve formal insolvency proceedings • the purpose of the transaction is key under IA 1986, s 423, whereas the purpose of the transaction under IA 1986, ss 238 and 339 is not relevant • under IA 1986, s 423, there is no requirement for the debtor to be insolvent at the time

Restructuring & Insolvency analysis: A transaction may be impugned under section 423 of the Insolvency Act 1986 (IA 1986) if it was done for the purpose of putting assets beyond the reach of creditors, even if the transferor had no current creditors and contemplated only future hypothetical creditors at the time of the transaction. The focus is on the ‘purpose’ of the transaction, and not on ‘the degree of knowledge that a transferor has of the persons who are making, or may make, claims against him’. In this case, the appellant had disposed of a 50% beneficial share in a property at a time when he had no creditors (and a number of years before his liability to the respondent arose), but when he intended to engage on a course of litigation which could (and ultimately did) lead to costs awards against him. The prohibited purpose was established, and the transfer was set aside. Written by Alex Peplow, barrister at XXIV Old Buildings.

This Practice Note describes the ‘transactions in UK land’ anti-avoidance provisions. The main rules are found in Part 8ZB of the Corporation Tax Act 2010 (CTA 2010) and Part 9A of the Income Tax Act 2007 (ITA 2007). Specific rules that apply to non-UK residents can also be found in section 5 of the Corporation Tax Act 2009 (CTA 2009) and section 6 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005). The rules are broadly the same for both corporation tax and income tax. This Practice Note refers to the rules generically (although the precise drafting of the corporation tax rules and income tax rules may be slightly different). The current rules replaced and extended the 'transactions in land' rules in CTA 2010, Pt 18 and ITA 2007, Pt 13. For more detail on the old transactions in land rules, see Practice Note: Real estate—anti-avoidance: disposals of land and taxing capital gains as income (pre 5 July 2016) [Archived]. This Practice Note explains: • the purpose of the rules • when

Offence of making transactions in fraud of creditors Any present or past officer of a company which is ordered to be wound up by the court or which passes a resolution for voluntary winding up is deemed to have committed an offence if whilst an officer of the company: • they made (or caused to be made) any gift, or transfer of, or charge on, or has caused or connived at the levying of any execution against the company's property, or • they concealed or removed any part of the company's property after or within two months before the date of any unsatisfied judgment or order for the payment of money was obtained against the company The offence can be tried in the magistrates' court or the Crown Court. A shadow director is not an officer for the purposes of this offence. A person 'causes' a thing to be done when they order or direct

FORTHCOMING CHANGE: At Tax Update 2026, HMRC published a consultation on ‘Modernising the distributions framework’. As part of the package of announcements designed to limit opportunities for taxpayers to extract value from companies as capital rather than income, HMRC proposed the replacement of the existing transactions in securities regime with an updated anti-avoidance regime that is ‘expected to be clearer and more principles based’. HMRC is concerned the current rules ‘reflect an outdated approach to anti-avoidance legislation and can be difficult to apply, which makes them less effective than intended in relation to certain structures.’ For more information, see News Analysis: HMRC consultation on modernising the taxation of distributions and repayments of capital from companies. This Practice Note covers the transactions in securities (TiS) rules relating to the avoidance of both income tax and corporation tax. The TiS rules are potentially relevant to a range of transactions, but in particular where a company is returning capital to its shareholders. In a transaction involving a corporate liquidation, advisers should also consider the ‘phoenix targeted anti-avoidance

FORTHCOMING CHANGE: At Tax Update 2026, HMRC published a consultation on ‘Modernising the distributions framework’. As part of the package of announcements designed to limit opportunities for taxpayers to extract value from companies as capital rather than income, HMRC proposed the replacement of the existing transactions in securities regime with an updated anti-avoidance regime that is ‘expected to be clearer and more principles based’. HMRC is concerned the current rules ‘reflect an outdated approach to anti-avoidance legislation and can be difficult to apply, which makes them less effective than intended in relation to certain structures.’ For more information, see News Analysis: HMRC consultation on modernising the taxation of distributions and repayments of capital from companies. This Practice Note covers the: • clearance procedure, and • administrative rules (enquiries, counteraction notices and appeals) relating to the transactions in securities (TiS) rules. For detailed guidance on the TiS rules, see Practice Note: Transactions in securities. There are separate TiS rules depending on whether the potential avoidance relates to income tax or corporation tax. The procedure