Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Employment Related Securities Manual

Securities with Artificially Enhanced Value

What is artificially enhanced market value?

The provisions in Chapter 3B apply where the market value of employment-related securities (or other relevant securities or interests in securities) is increased 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 this Chapter, 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 ERSM60030.

University spin-out companies

There is a specific exemption from the operation of Chapter 3B in Chapter 4A (shares in research institute spin-out companies). Where a company qualifies for relief within that Chapter, under ITEPA03/S455, neither an intellectual property agreement nor any transfer of intellectual property pursuant to such an agreement is regarded as a thing “done otherwise than for genuine commercial purposes”, see ERSM100010 et seq.