Commentary

D9.101 Background and scope of legislation

Corporate tax
Corporate tax | Commentary

D9.101 Background and scope of legislation

Corporate tax | Commentary

Part D9     Transactions in securities

Contents of Part D9

D9.1     Tax avoidance—transactions in securities

D9.2     [Removed]

D9.3     Transfer of rights to income

D9.4     Accrued income scheme

D9.5     Deeply discounted securities

D9.6     [Removed]

D9.7     Manufactured dividends and interest

[D9.8]     [Rewritten—Quoted Eurobonds]

[D9.9]     [Rewritten—Gilts]

D9.10     Sale and repurchase of securities—repos

D9.11     Certificate of deposit

Division D9.1     Tax avoidance—transactions in securities

Reviewed by
DONALD DRYSDALE CA CTA (Fellow) TEP MBCS CITP

For updates affecting this Division please see Part D0 Updates

Tax avoidance—transactions in securities: General

D9.101 Background and scope of legislation

Historical background

Before 6 April 1960 there was no general statutory provision that prevented a taxpayer from effecting transactions in securities aimed purely at tax avoidance. Various statutory provisions were aimed at specific tax avoidance devices, such as bond-washing, but the absence of an effective anti-avoidance enactment permitted the carrying on of a brisk trade in marketing arrangements. These were at first aimed at the avoidance of surtax on the accumulated income of trading companies and subsequently at the substitution of income chargeable to income tax by capital receipts not chargeable to tax at all, as there was no capital gains tax at all until 1965. Even after the introduction of capital gains tax, the rate of tax on capital gains has at various later times been much lower than the rate of tax on income. Indeed, capital gains tax on gains for

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