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HMRC internal manual

Employment Related Securities Manual

HM Revenue & Customs
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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.