Income Tax (Trading and Other Income) Act 2005 section 452G

Corporate strips: manipulation of acquisition, transfer or redemption payments

Section 452G is an anti-avoidance provision that counteracts schemes or arrangements designed to manipulate the acquisition cost, transfer proceeds or redemption proceeds of corporate strips in order to obtain a tax advantage.

• Where a scheme or arrangement results in the acquisition cost, transfer proceeds or redemption proceeds of a corporate strip differing from market value, and a main benefit is obtaining a tax advantage, the section applies
• In such cases, the inflated acquisition cost or understated transfer or redemption proceeds are replaced with the market value of the corporate strip at the relevant time for the purpose of calculating profits on disposal
• Market value is determined ignoring any increase or decrease in value caused by the scheme or arrangement itself
• Any incidental expenses connected with the acquisition or disposal of the corporate strip are disregarded for the purposes of this section