Key conditions

The rule applies where two conditions are met:

There are ‘arrangements’ that materially reduce the value of shares or securities, TCGA92/S31(1)(a), and

One of the main purposes of the arrangements is of obtaining a ‘tax advantage’, TCGA92/S31(1)(b).

The tax advantage may arise to the vendor group company making the share disposal or to any other person, TCGA92/S31(3)(b).

However, the rule will never apply where the arrangements consist solely of making an ‘exempt distribution’, TCGA92/S31(1)(c).

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