The transactions in securities (TiS) legislation counteracts income tax advantages obtained through specified transactions involving close companies. Its scope extends beyond sales of shares to include repayments of share capital or share premium and distributions in respect of securities in a winding up.

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