Taxation of Chargeable Gains Act 1992 section 151C

Strips: manipulation of price: associated payment giving rise to loss

Section 151C prevents capital losses from being treated as allowable losses where they arise from schemes or arrangements involving government securities strips that have been designed to manipulate prices for tax advantage purposes.

• Where a scheme or arrangement involving strips has an unallowable purpose and a payment is made outside the normal acquisition or disposal of a strip, any resulting capital loss is disallowed
• A scheme or arrangement has an unallowable purpose if its main benefit (or one of its main benefits) is to obtain a tax advantage for any person or to generate an allowable loss
• The payments caught by this rule are typically those made under side agreements such as option contracts, rather than straightforward purchases or sales of strips
• This anti-avoidance rule applies to losses accruing on or after 17 March 2004