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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 Section554C(1)(a) or (d) (seeEIM45910 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 9December 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.