Income Tax (Trading and Other Income) Act 2005

456 Securities issued to connected persons etc. at excessive price: subsequent transfers to connected persons

(1) No loss is taken to occur for the purposes of section 454 on a transfer of a deeply discounted security to a person connected with the transferor if conditions A and B and either condition C or conditions D and E are met.

(2) Condition A is that the transferor acquired the security on its issue.

(3) Condition B is that the amount paid by the transferor to acquire the security exceeded the market value of the security at the time of its issue.

(4) Condition C is that at that time the transferor was connected with the issuer.

(5) Condition D is that at that time the issuer was a close company.

(6) Condition E is that at that time the transferor controlled that company with other persons to whom securities of the same kind were also issued.

(7) Section 414 of ICTA (close companies) has effect for the purposes of this section with the omission of subsection (1)(a) (which excludes non-UK resident companies).

(8) In this section “control” has the meaning given by section 416 of ICTA.