Income Tax (Trading and Other Income) Act 2005

559 When disposals involve guaranteed returns

(1) For the purposes of this Chapter, a disposal of a future or option involves guaranteed returns if conditions A to C are met.

(2) Condition A is that the disposal is one of two or more related transactions (see section 566).

(3) Condition B is that those transactions are designed to produce a guaranteed return (see subsection (5)).

(4) Condition C is that the guaranteed return comprises—

(a) the return from the disposal (see section 561), or

(b) the return from a number of disposals of futures or options, of which the disposal is one, taken together.

(5) For the purposes of this Chapter, two or more related transactions are transactions designed to produce a guaranteed return if, taking them together, it would be reasonable to assume from one or more of the matters specified in subsection (6) that—

(a) the main purpose of the transactions is or was the production of a guaranteed return from one or more disposals of futures or options (see section 560), or

(b) that is or was one of their main purposes.

(6) Those matters are—

(a) the likely effect of the transactions,

(b) the circumstances in which the transactions are entered into, and

(c) the circumstances in which any one of the transactions is entered into.

(7) In the case of a transaction which is a disposal, the references in subsection (6) to entering into the transaction are references to making the disposal.