CG14570 - Transactions between connected persons: limitation to operation of S18
It is important to notice that TCGA92/S18 operates only where the transaction involves BOTH an acquisition and a disposal. A transaction by way of sale or gift will involve both an acquisition and a disposal: the purchaser or donee acquires the asset, the vendor or donor disposes of the asset. The most common example of a transaction which does not involve both is the issue of shares by a company: the shareholders acquire shares but the ISSUE of shares by the company is not a disposal. Another example is the purchase by a company of its own shares.
A company may issue further shares to its controlling shareholder. They are connected persons but Section 18 does not apply, because the company has not made a disposal. The market value rule will apply in such circumstances ONLY IF you can demonstrate that the acquisition of shares was otherwise than by way of bargain at arm바카라 사이트™s length. Section 17 would then apply directly, without the operation of Section 18.