Paragraph 1(1) Schedule 13 FA 2007 states explicitly that the
purpose of the legislation is that arrangements involving the sale
and subsequent purchase of securities that equate in substance to
the lending of money by or to a company (with the securities acting
as collateral for the loan) are to be taxed in accordance with
their economic substance and accounting treatment.
This provision is intended on the one hand to deter the type
of avoidance schemes that under the previous legislation depended
on narrowly interpreting its terms, and on the other hand to give
taxpayers assurance that HMRC will not be able to argue for a
different treatment from that shown in the accounts, on the grounds
that the legislation is not absolutely explicit as to how a
particular matter is to be treated.
Where there is any tension between the purposive statement
and the detailed provisions, the result obtained by adopting the
purposive approach should be preferred over a literal
interpretation.
