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HMRC internal manual

Employment Income Manual

Employment income provided through third parties: anti-forestalling rules: early step within Section 554C(1)(a) or (d): priority of Part 7 ITEPA 2003 over Part 7A rules

Schedule 2 paragraph 55 FA 2011

If a relevant third person (P) takes an early step within Section 554C(1)(a) or (d) (see EIM45910 and EIM45915 respectively), it may be that one of the statutory exclusions will prevent the anti-forestalling rules from applying.

Section 554N (exclusions: priority of Part 7 ITEPA 2003 over Part 7A rules) applies with one modification. This modification is designed to ensure that the effect of the anti-forestalling provisions published on 9 December 2010 (when the legislation was published in draft) was not altered in a way that would disadvantage taxpayers.

This guidance discusses Section 554N at EIM45325 onwards.

This is the modification. If the early step is a loan to exercise an employment-related securities option:

  • it cannot come within the exclusion in Section 554N(13), and
  • accordingly, the related fall-back charge in Section 554N(14) to (16) cannot apply.

On Section 554N(13) to (16), see EIM45335.