Commentary

D9.113 The prescribed circumstances—Circumstance C

Corporate tax
Corporate tax | Commentary

D9.113 The prescribed circumstances—Circumstance C

Corporate tax | Commentary

D9.113 The prescribed circumstances—Circumstance C

These provisions apply for corporation tax purposes. For details of the income tax regime see D9.116A–D9.119.

Circumstance C applies where a person (A) receives, in a form not taxable as income, consideration which:

  1.  

    (a)     is or represents assets of a company available for distribution by way of dividend (or would be available apart from anything done by the company) (dividend stripping); or

  2.  

    (b)     is received in respect of future receipts of a company (backward stripping); or

  3.  

    (c)     is or represents the value of trading stock of a company (stock stripping)1.

The term 'assets' does not include assets which represent a return of sums paid on the issue of securities, even if the law of the relevant company requires such assets to be available for distribution.

The significance of these descriptions of the consideration is considered with circumstance D.

The consideration must be received in consequence of a transaction under which

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