Corporation Tax Act 2010 section 734

Exception where no tax avoidance object shown

Section 734 provides a safe harbour from the counteraction provisions in section 733, where a company can demonstrate that its transactions in securities have genuine commercial purposes and are not primarily aimed at obtaining a corporation tax advantage.

• The counteraction rules in section 733 do not apply if a company can show that its transaction or transactions in securities satisfy two conditions (conditions A and B).
• Condition A requires that the transaction or transactions were carried out for genuine commercial reasons, or in the ordinary course of making or managing investments.
• Condition B requires that obtaining corporation tax advantages was not the main object, nor one of the main objects, of the transaction or any of the transactions.
• The burden of proof falls on the company — it must demonstrate that both conditions are met in order to benefit from this exception.