Commentary

D9.117 Positive filter: the general filter

Corporate tax
Corporate tax | Commentary

D9.117 Positive filter: the general filter

Corporate tax | Commentary

D9.117 Positive filter: the general filter

These provisions apply for income tax purposes. For details of the corporation tax regime see D9.102A–D9.116.

The first filter brings into the scope of the legislation any person (referred to as 'the party') where1:

  1.  

    •     the person is a party to a transaction in securities or two or more transactions in securities

  2.  

    •     the circumstances are covered by the specific technical filter (see D9.118) and not excluded by the negative filter (see D9.119)

  3.  

    •     the main purpose, or one of the main purposes, of the transaction in securities, is to obtain an income tax advantage, and

  4.  

    •     the party or (for transactions on or after 6 April 2016) any other person, obtains an income tax advantage in consequence of the transaction or the combined effect of the transactions

Although this looks similar to the current rules for corporation tax, there are some fundamental differences to consider.

Party to a transaction

Under the current rules, the person against whom HMRC can take counteraction must be a person who was party to the transaction in securities2.

In Addy3 (see D9.114), Mrs Addy argued that she could not have had a tax avoidance motive, as she was not party to the decision to liquidate the company. The now current income tax rule, which states that the person obtaining the income tax advantage must actually have been party to the transaction in securities, might have been of some help to Mrs Addy: since she was not party to the decisions to

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