D9.102 Interaction with other legislation
By virtue of a general interpretation provision, 'tax' for the purposes of the transactions in securities legislation as originally enacted means income tax and corporation tax1 and so does not include capital gains tax. (After the rewrite in ITA 2007, separate definitions of 'income tax advantage' and 'corporation tax advantage' apply for the purposes of each of those taxes (see D9.103) and capital gains tax is still not included.)
This is now made explicit in the current income tax rules2, whereby the measure of the income tax advantage is only by reference to the tax that would otherwise have been paid on a lawful distribution3.
Most commentators have agreed that this also means that the transactions in securities legislation does not apply to the avoidance of corporation tax on chargeable gains. Not surprisingly, HMRC have not historically been willing to confirm that the scope of the provisions is limited in this way. That said, the proposals in the July 2009 Consultation Document include a proposal to provide that the amended legislation will only apply to the avoidance of corporation tax on income.
However, the HMRC view has always been that if a transaction in securities falls within the relevant conditions, counteraction can