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HMRC internal manual

Employment Related Securities Manual

Securities with Artificially Depressed Value

What is an artificially depressed market value?

The provisions in Chapter 3A apply where the market value of employment-related securities (or other relevant securities or interests in securities) is reduced by things done otherwise than for genuine commercial purposes.

Otherwise than for genuine commercial purposes

Per ITEPA03/S446A, the following are among the things that are, for the purposes of Chapter 3A, done otherwise than for genuine commercial purposes:

  1. Anything done that has as its main purpose (or one of its main purposes) the avoidance of tax or NIC; and
  2. Non-arm’s length transaction between members of a group of companies other than payments for group relief (ICTA88/S402 (6)). In this context “group” means a company and its 51% subsidiaries.

See examples at ERSM50030.