CTM36830 - Particular topics: transactions in securities: circumstance B - deduction in computing profit or gain

See ITA07/S687 for income tax on or after 6 April 2007 or ICTA88/S704B for income tax advantages prior to 6 April 2007 and corporation tax advantages all periods.

Circumstance B was aimed at companies trading in securities. A deduction in computing profits or gains arose from a fall in value of the securities due to payment of a dividend (dividend stripping) or from any other dealing with assets of the company. This may be sale of its stock to the purchasing company at book value and resale at market value (making a profit) and the subsequent sale of the shares at a loss (stock stripping). Circumstance B has largely been overtaken by specific legislation at ICTA88/S730-738 and at ITA07/S565 onwards for income tax avoidance after 5 April 2007.