D9.104 Meaning of transactions in securities
These provisions apply for corporation tax purposes. For details of the income tax regime see D9.116A–D9.119.
Counteraction under the anti-avoidance legislation can only be taken against a taxpayer if he is in a position to obtain or has obtained a tax advantage (see D9.103) in consequence of1:
(a) a transaction in securities; or
(b) the combined effect of two or more transactions in securities; or
(c) the combined effect of one or more transactions in securities and the liquidation of a company2.
The expression 'transaction in securities' has a very wide meaning and includes transactions of whatever description relating to securities, in particular the purchase, sale or exchange of securities, the issuing or securing the issue of new securities, applying or subscribing for new securities or altering or securing the alteration of the rights attached to securities3. Securities includes shares and stock, and, in relation to a company not limited by shares, to an interest of a member of the company in whatever form4. These examples are not exhaustive; in IRC v Parker5 it was held that the redemption of debentures was a transaction in securities, and in Williams v IRC6 it was held that loans by a company (to individuals who subsequently acquired it) were transactions in securities. It must now be taken as established that 'securities' includes an obligation secured by personal covenant without a charge on property.
A distinction needs to be drawn between the general requirement for the tax advantage to be obtained