Part II General Provisions relating to computation of gains and acquisitions and disposals of assets
Chapter II Assets and disposals of assets
Value shifting
C1C3C4C6C7C8C9C1030 Tax-free benefits.
1
This section has effect as respects the disposal of an asset if a scheme has been effected or arrangements have been made (whether before or after the disposal) whereby—
a
the value of the asset F4... has been materially reduced, and
b
a tax-free benefit has been or will be conferred—
i
on the person making the disposal or a person with whom he is connected, or
ii
subject to subsection (4) below, on any other person.
F52
But, for the purposes of corporation tax, this section does not have effect if the disposal of the asset is a disposal by a company of shares in, or securities of, another company (as to which see section 31).
3
For the purposes of subsection (1)(b) above a benefit is conferred on a person if he becomes entitled to any money or money’s worth or the value of any asset in which he has an interest is increased or he is wholly or partly relieved from any liability to which he is subject; and a benefit is tax-free unless it is required, on the occasion on which it is conferred on the person in question, to be brought into account in computing his income, profits or gains for the purposes of income tax, capital gains tax or corporation tax.
4
This section shall not apply by virtue of subsection (1)(b)(ii) above F1in a case where avoidance of tax was not the main purpose or one of the main purposes of the scheme or arrangements in question.
C2C55
Where this section has effect in relation to any disposal, any allowable loss or chargeable gain accruing on the disposal shall be calculated as if the consideration for the disposal were increased by such amount as F2is just and reasonable having regard to the scheme or arrangements and the tax-free benefit in question.
6
Where—
a
by virtue of subsection (5) above the consideration for the disposal of an asset has been treated as increased, and
b
the benefit taken into account under subsection (1)(b) above was an increase in the value of another asset,
any allowable loss or chargeable gain accruing on the first disposal of the other asset after the increase in its value shall be calculated as if the consideration for that disposal were reduced by such amount as F3is just and reasonable having regard to the scheme or arrangements in question and the increase made in relation to the disposal mentioned in paragraph (a) above.
7
References in this section to a disposal do not include references to any disposal falling within section 58(1), 62(4) or 171(1).
F68
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9
In relation to a case in which the disposal of an asset precedes its acquisition the references in subsections (1)(a) and (2) above to a reduction shall be read as including a reference to an increase.