Corporation Tax Act 2010 Explanatory Notes

Corporation Tax Act 2010

2010 CHAPTER 4

Introduction

Part 23: Company distributions

Chapter 2: Matters which are distributions

Section 1006: Distributions exceeding consideration received for issue of security

2978. This section qualifies the meaning of “the principal secured” for the purposes of section 1005 and of paragraph E in section 1000. It is based on section 209(3) of ICTA.

2979. The basic meaning of “principal secured” is not defined in tax statute and takes its general meaning, subject to any relevant specific tax rules.

2980. In measuring the extent to which there is more than a reasonable commercial return for the use of the principal, the “principal secured” cannot be greater than the amount given for the issue of the security.

2981. Section 1117(6) provides a further qualification if securities are issued at a price less than the amount repayable on them, and are not listed on a recognised stock exchange.