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HMRC internal manual

Employment Related Securities Manual

Securities acquired for less than market value: charge on acquisition

Avoidance cases

For acquisitions on or after 2 December 2004, ITEPA03/S446S to ITEPA03/S446U (notional loan treatment) will not apply in certain circumstances. These are where the main purpose (or one of the main purposes) of the arrangements under which the right or opportunity to acquire the employment-related securities is made available is the avoidance of tax or national insurance contributions.

Instead, ITEPA03/S446UA provides that an amount equivalent to what would have been the initial notional loan will count as employment income of the employee for the tax year in which the acquisition takes place.

If the securities used in avoidance are restricted you should also consider liability created by ITEPA03/S431B - see ERSM30380.

If the securities are an option (redefined as a security) used in avoidance you should also consider the provisions of ITEPA03/S437(2) & (3).

If you consider that securities may have been acquired at less than full market value as part of an avoidance scheme, you must refer the case to Employee Shares & Securities Unit (ERSM10040).