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E4.507B Restricted securities—overview and definition

ITEPA 2003, ss 422–432 (Pt 7, Ch 2) covers restricted securities, and is a particularly complex piece of drafting, in part because it subsumed many different earlier rules relating to variations in rights and conditional acquisitions of shares into the ITEPA 2003, ss 417–554 (Pt 7) regime, and the basic frameworks of those earlier pieces of legislation were quite different.

It is also important to appreciate that not all of the anti-avoidance provisions relating to restricted securities appear in the same place as the basic rules. ITEPA 2003, ss 422–432 (Pt 7, Ch 2) must, therefore, be read in conjunction with ITEPA 2003, s 446E (in ITEPA 2003, ss 446A–446J (Pt 7, Ch 3A), see E4.507O), which modifies the tax charge on restricted securities where the value of restricted securities is artificially reduced because of something not done for a genuine commercial purpose.

Nonetheless, the overall aim of ITEPA 2003, ss 422–432 (Pt 7, Ch 2) was summarised neatly in the Explanatory Notes to the Finance Bill 2003:

'The changes now being made ensure