What is the purpose of section 553 of the Corporation Tax Act 2009?

Section 553 ensures that where securities are bought or sold by an intermediary such as a nominee, agent or trustee on behalf of another person, the United Kingdom disguised interest rules in this chapter apply to the beneficial owner who economically benefits, rather than to the person who physically executes the transaction.

How does section 553 treat a person who buys securities on behalf of someone else?

If a person purchases securities or holds a right or obligation to buy them but holds those securities for the benefit of another person, section 553 treats the beneficiary as the buyer. This means the disguised interest rules apply to the beneficiary's tax position, not to the intermediary who carried out the purchase.

How does section 553 apply on the selling side of a securities transaction?

Where a person sells securities but the sale proceeds are held for the benefit of someone else, section 553 treats the beneficiary as the seller. The beneficiary's tax position is therefore the relevant one when applying the disguised interest provisions under this chapter of the Corporation Tax Act 2009.

Can the disguised interest rules be avoided by using a nominee or agent to transact?

No. Section 553 prevents circumvention of the disguised interest rules by interposing an agent, nominee or other intermediary. The provision looks through the intermediary to identify the person with the beneficial interest, ensuring the tax consequences fall on the true economic owner of the securities.

Corporation Tax Act 2009 section 553

Persons buying or selling for others

Section 553 ensures that where securities are bought or sold by one person on behalf of another, the tax rules apply to the beneficial owner rather than the person who carries out the transaction.

Where a person buys securities (or has a right or obligation to buy them) but holds them for the benefit of someone else, the beneficiary is treated as the buyer for the purposes of this chapter.
Where a person sells securities but the sale proceeds are held for the benefit of someone else, the beneficiary is treated as the seller.
The section operates by reference to beneficial ownership, not legal ownership or the identity of the person who physically executes the transaction.
This prevents the disguised interest rules from being circumvented by interposing an agent, nominee or other intermediary between the true economic owner and the securities transaction.

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