Corporation Tax Act 2009 section 931K

Schemes involving quasi-preference or quasi-redeemable shares

Section 931K is an anti-avoidance rule that prevents distributions from being treated as exempt under the non-redeemable ordinary shares category where a scheme has been used to disguise what are effectively preference shares or redeemable shares as ordinary shares.

• This section targets dividends or distributions that would normally be exempt under the non-redeemable ordinary shares class (section 931F)
• It applies where a scheme exists whose main purpose (or one of its main purposes) is to secure that distributions qualify for the section 931F exemption
• The exemption is denied if, when you factor in the rights that each relevant person has under the scheme, the share would either cease to be an ordinary share or would become redeemable
• This section only blocks exemption under the non-redeemable ordinary shares class — it does not prevent the distribution from qualifying as exempt under any other exempt class