Owner-Managed Businesses

Transactions in securities and the Phoenix TAAR ― outline of regime

Produced by Tolley
  • 17 Nov 2021 13:51

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Transactions in securities and the Phoenix TAAR ― outline of regime
  • Transactions in securities
  • Definition of a transaction in securities
  • Prescribed conditions
  • Calculation of income tax advantage
  • Clearances
  • TAAR tackling ‘phoenixism’

The transactions in securities (TiS) legislation is anti-avoidance legislation aimed at situations where close company shareholders have engineered a disposal of shares to obtain a beneficial capital gains tax (CGT) rate, ie avoid income tax, on specified transactions. Note there are also TiS rules for corporate tax purposes. These are to all intents and purposes redundant as companies are generally exempt from corporation tax on dividends and cannot, therefore, be said to be avoiding corporation tax on income if, instead, they receive capital sums. However, the corporate tax provisions have not been repealed incase some complex avoidance schemes would then become available to the corporate sector.

The targeted anti-avoidance rule (TAAR) which aims to combat cases of ‘phoenixism’ applies to certain distributions made in the process of winding up companies on or after 6 April 2016. Prior to April 2016, such transactions were usually covered by the TiS regime. The TAAR was introduced to provide absolute certainty of treatment for such transactions. and in practice when there is a company winding up, the TAAR may be in point rather than the TiS.

This guidance note runs through the key legislative rules and definitions. The concepts are further expanded in Simon’s Taxes D9.1. HMRC guidance on the TiS rules and on the TAAR can be found at CTM36800 and CTM36300 respectively.

For a separate discussion of some of the TiS and TAAR issues that may be encountered on a sale / winding up of a business in practice, see the Transactions in

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information


Popular Articles

Utilising the capital gains tax annual exemption

Taxpayers may wish to consider basic tax planning arrangements in use the capital gains tax annual exemption. This type of tax planning is often reviewed at the end of the tax year.This guidance note first looks at the annual exemption in detail and then various tax planning strategies that might be

27 Oct 2021 19:10 | Produced by Tolley Read more Read more

Class 4 national insurance contributions

Class 2 and Class 4 national insurance contributions (NIC) are paid by self-employed individuals and partners in a partnership on their profits arising within the UK. This guidance note considers Class 4 contributions. For Class 2 contributions, see the Class 2 national insurance contributions

19 Oct 2021 22:37 | Produced by Tolley Read more Read more

Self assessment ― estimates and provisional figures

If the taxpayer does not have sufficient information to enable them to complete the tax return in the time allowed, they should include either a best estimate or a provisional figure. The taxpayer should not either leave a box blank or enter ‘details to follow’ as HMRC will regard this as an

20 Oct 2021 10:52 | Produced by Tolley Read more Read more