CTM36806 - Particular topics: transactions in securities: persons affected

ITA07/S684 (1) sets out the basic requirements. The legislation applies when:

• a person is a party to a transaction, or transactions, in securities (see CTM36810), and
• the circumstances are
  • covered by ITA07/S685, but
  • not excluded by ITA07/S686 (see CTM36830).

In addition two further conditions must be satisfied, that:

For transactions occurring before 6 April 2016:

• the main purpose, or one of the main purposes, of the person being a party to the transaction or any of the transactions in securities is to obtain an Income Tax advantage (see CTM36815), and

the person obtains an Income Tax advantage in consequence of the transaction or the combined effect of the transactions.

For transactions occurring on or after 6 April 2016:

• the main purpose, or one of the main purposes of the transaction, or any of the transactions, in securities is to obtain an Income Tax advantage (see CTM36815), and
• the person who is party to the transaction, or any other person, obtains an Income Tax advantage in consequence of the transaction or the combined effect of the transactions.

Thus, from 6 April 2016 the legislation considers the purpose or purposes of the transaction or transactions, rather than just the purpose or purposes of the person who was party to them. This broadens the scope of the test to include not only the main purpose or purposes of all the persons involved in the transactions but also the consequences that may be expected to result from those transactions.