Introduction to this document

Transactions in securities clearance letter

Income and corporation tax anti-avoidance rules apply to a wide range of transactions involving shares or securities in companies. To provide certainty over whether HMRC will consider that a transaction is caught by the anti-avoidance rules, you can apply to it for advance clearance.


Where the possible tax avoidance is an income tax saving for the shareholder, s.684 to s.687 Income Tax Act 2007 (ITA) set out the circumstances in which HMRC has power to cancel the tax saving using the transaction in securities legislation. HMRC does this by issuing a notice in accordance with s.695 ITA.

Where the possible tax avoidance is a corporation tax saving for the company, HMRC can cancel the tax advantage through the issue of a notice in accordance with s.743 Corporation Tax Act 2010 (CTA).


Application for advance clearance

The company and the shareholder(s) can ask HMRC for confirmation (advance clearance) that it is satisfied in the circumstances that no counteraction of avoidance notice should be issued in respect of the proposed transaction(s).

As part of the same request for clearance HMRC can be asked to confirm that in accordance with s.748 CTA 2010 it is satisfied that the transaction(s) is not avoidance for which it can issue a counteraction notice in accordance with under s.743 CTA.


The application should be made sufficiently early so that HMRC has time to respond. It must do so within 30 days of receiving the application. When planning the application for clearance bear in mind that HMRC can ask for further information which might mean that the time it takes to obtain a definitive decision may be longer than 30 days.