Corporation Tax Act 2009 section 629

Tax avoidance

Section 629 removes the benefit of the connected company transfer rules in two specific situations where tax avoidance is involved.

• Where there are tax avoidance arrangements for the derivative contract to be passed on by the transferee, the connected company transfer rules in section 625 are disapplied.
• The first case targets situations where the transferor is party to arrangements designed to avoid tax, under which the derivative contract will be transferred onwards by the recipient company.
• The second case applies where another anti-avoidance provision (section 698) catches a disposal that would otherwise qualify for connected company transfer treatment under section 625.
• In both cases, the effect is that the transfer can no longer benefit from the favourable treatment normally available for transfers of derivative contracts between connected companies.