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The SSE regime contains anti-avoidance provisions which are designed to prevent abuse of the exemption.

HMRC has confirmed that these anti-avoidance provisions are designed to catch very specific activities and it does not expect these provisions to be triggered very often.

The legislation sets out that SSE will not apply in situations where in pursuance of arrangements entered into with the sole or main benefit being to secure an exempt gain, an untaxed gain arises within a company as a result of a disposal of shares and before the gain arose, either:

1. •

   the investing company acquired control of the target company, or the same person(s) acquire ‘control’ of both companies

2. •

   there has been a ‘significant change in the trading activities’ of the target company at a time when it was controlled by the investing company, or both companies were controlled by the same person or persons

These terms are explained below.

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