600K Anti-avoidance: qualifying investment (shares)

Summary

Section 600K is an anti-avoidance provision relating to the qualifying investment in respect of shares. This section applies to shares in respect of which there is an agreement which reduces the risks associated with the shares or with distributions associated with those shares. An investment in shares where such an agreement exists will not be a qualifying investment. The section applies not just to the shares but to rights associated with those shares.

Details

(1)A “distribution” has the same meaning as in the Corporation Tax Acts.

(2)For the purposes of this section, an amount specified or implied shall include an amount specified or implied in a foreign currency.

(3)This section applies to shares in a company where any arrangement exists which could reasonably be considered to substantially reduce the risk that the person beneficially owning those shares—

1. (3)(a)might, at or after a time specified in or implied by that arrangement, be unable to realise directly or indirectly in money or money’s worth an amount so specified or implied, other than a distribution, in respect of those shares, or
2. (3)(b)might not receive an amount so specified or implied of distributions in respect of those shares.

(4)The reference in this section to the person beneficially owning shares shall be deemed to be a reference to both that person and any person connected with that person.

(5)An investment in shares to which this section applies shall not be a qualifying investment for the purposes of this Chapter.

(6)This subsection sets out that such arrangements may include any rights associated with the shares as set out in the company’s constitution. Thus, this section applies not just to the shares but to rights associated with those shares.

Relevant Date: Finance Act 2024