The transactions in securities (TiS) legislation is anti-avoidance legislation aimed at situations where close company shareholders have engineered a disposal of shares to obtain a beneficial capital gains tax (CGT) rate, ie avoid income tax, on specified transactions.

The targeted anti-avoidance rule (TAAR) aims to combat cases of ‘phoenixism’ and applies to certain distributions made in the process of winding up companies. Phoenixism refers to the same business ‘rising from the ashes’ of a company, in other words where a company is liquidated and subsequently its business is carried on under the same or broadly the same ownership via a new entity within two years of the winding-up. Such transactions are likely to also be covered by the TiS regime ― the TAAR was introduced to provide absolute certainty of treatment for such transactions. In practice when there is a company winding up the TAAR may be in point rather than the TiS.

This guidance note discusses some of the TiS and TAAR issues that may be encountered