Income Tax Act 2007 section 762

Tracing value

Section 762 establishes the principle of tracing value, which allows HMRC to follow the economic benefit of a transaction through a chain of connected steps, even where the value has been transformed or passed through intermediaries.

• Value can be traced through a series of transactions, regardless of how many steps are involved or whether the form of the asset changes along the way.
• The tracing principle applies where value is derived from, or represents, value that originated in an earlier transaction — even if it has passed through several hands.
• This rule prevents taxpayers from breaking a direct link between an original source of value and the ultimate recipient by inserting intermediate transactions or converting assets into different forms.
• The provision supports the broader anti-avoidance rules in this part of the Act by ensuring that the economic substance of arrangements is not disguised through complex or multi-step structures.