Section 1088 — Corporation Tax Act 2010: Meaning of “chargeable payment”

Meaning of “chargeable payment” 1088 1 In this Chapter “ a chargeable payment ” means any payment which—

a meets each of conditions A to D in this section, or b is a chargeable payment by virtue of section 1089.

2 Condition A is that the payment is made by a company concerned in an exempt distribution and is made (directly or indirectly)—

a to a member of that company, or b to a member of any other company concerned in the exempt distribution.

3 Condition B is that the payment is made—

a in connection with the shares in the company making the payment, b in connection with the shares in any other company concerned in the exempt distribution, or c in connection with any transaction affecting the shares mentioned in paragraph (a) or (b).

4 Condition C is that the payment—

a is not made for genuine commercial reasons, or b forms part of a tax avoidance scheme.

5 Condition D is that the payment—

a is not a distribution or an exempt distribution, and b is not made to a company that belongs to the same group as the company making the payment.

6 In this section and section 1089— “ tax avoidance scheme ” means a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and “ tax ” includes stamp duty and stamp duty land tax.

7 This section is to be read with section 1089.