What is the purpose of section 731 of the Corporation Tax Act 2010?

Section 731 introduces the Part of the Corporation Tax Act 2010 that deals with counteracting corporation tax advantages obtained by companies through transactions in securities. It establishes the framework under which HMRC can identify and neutralise unfair tax advantages arising from such transactions under United Kingdom law.

Which companies are affected by the counteraction provisions in Part 15 of the Corporation Tax Act 2010?

The counteraction provisions apply to companies that meet the criteria set out in section 733 of the Corporation Tax Act 2010. If a company falls within the scope of section 733 and has entered into transactions in securities giving rise to a corporation tax advantage, HMRC may apply the counteraction provisions to adjust its tax position.

How does HMRC counteract corporation tax advantages from securities transactions?

HMRC counteracts corporation tax advantages through counteraction notices as set out in section 746 of the Corporation Tax Act 2010. A counteraction notice is the formal mechanism by which HMRC adjusts a company's tax position to remove the benefit gained from relevant securities transactions, effectively neutralising the tax advantage obtained.

What are the legislative origins of the transactions in securities provisions in the Corporation Tax Act 2010?

These provisions originate from sections 703 and 709 of the Income and Corporation Taxes Act 1988. They also closely mirror the equivalent income tax rules for individuals found in sections 682 to 685 of the Income Tax Act 2007. Key concepts include the definition of corporation tax advantage and identification of the liable company.

Corporation Tax Act 2010 section 731

Overview of Part

Section 731 introduces the Part of the Act that deals with counteracting corporation tax advantages obtained by companies through transactions in securities.

This Part provides the framework for counteracting corporation tax advantages arising from securities transactions.
It applies to companies that fall within the scope of section 733, which defines which companies are liable to counteraction.
The mechanism for counteracting these tax advantages is through counteraction notices, as set out in section 746.
The provisions replicate corresponding income tax rules and define key concepts such as "corporation tax advantage" and the company liable to counteraction.

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