Legislation in Finance Bill 2016 (clauses 33–35) amends the transactions in securities rules and introduces a new targeted anti-avoidance rule in connection with company distributions. The changes are intended to prevent companies using certain arrangements to turn income distributions into capital such as retaining profits before a sale to a third party using a winding-up to create a new ‘phoenix’ company repaying share capital or purchases of own shares in the case of unquoted companies.
The government has now published the responses to its consultation setting out details of amendments made to the draft legislation published in December. This confirms that the final version of legislation in the Finance Bill:
will not apply to minority shareholders;
defines ‘arrangements’ more clearly;
will not treat distributions as income to the extent that they represent the capital gains ‘base...
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Legislation in Finance Bill 2016 (clauses 33–35) amends the transactions in securities rules and introduces a new targeted anti-avoidance rule in connection with company distributions. The changes are intended to prevent companies using certain arrangements to turn income distributions into capital such as retaining profits before a sale to a third party using a winding-up to create a new ‘phoenix’ company repaying share capital or purchases of own shares in the case of unquoted companies.
The government has now published the responses to its consultation setting out details of amendments made to the draft legislation published in December. This confirms that the final version of legislation in the Finance Bill:
will not apply to minority shareholders;
defines ‘arrangements’ more clearly;
will not treat distributions as income to the extent that they represent the capital gains ‘base...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
