| Financial Benefits to Encourage Employee Participation |
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16A.4 Anti-Avoidance: Manipulation of Values |
Into this scheme FA 2003 has been planted chapters 3A–3D, sections 446A–446Z,59 all concerned with avoidance through the manipulation of values, so 3A deals with securities with artificially depressed market value, 3B with securities acquired with artificially enhanced 3C with securities acquired for less than market value and 3D with securities disposed of for less than market value. |
16A.4.1 Securities with Artificially Depressed Market Value, Chapter 3A |
Chapter 3A applies where the market value of employment related securities is reduced by things done otherwise than for genuine commercial purposes, a phrase defined as including situations where tax avoidance is a main purpose.60 There is also an arms length test for group transactions but with an exception for a payment for group relief under TA 1988, section 406(2).61 |
16A.4.1.1 Acquisition62 |
There is a charge where the market value of the employment related securities at the time of acquisition has been reduced by at least 10% by transactions over the previous 7 years. The charge is not to affect various other charges—section 63, section 203 and chapters 3, 3C or 5 of part 7.63 However a charge under 425(2) excludes a charge here. |
The amount taxed is usually that by which the fair market value of the securities has been reduced, judging the facts as at the time of acquisition. If that reduction is less than the consideration actually paid for the employment related securities consideration is taken instead.64 |