In tax law, a number of anti-avoidance provisions include a let-out whereby a transaction is not caught under the provisions if it can be shown that it was carried out for ‘genuine commercial reasons’. Such a let-out is found, for example, in the legislation on transactions in securities, which imposes an income tax charge in place of a charge to capital gains tax: the Income Tax Act 2007 removes the income tax charge if the taxpayer shows that the transaction is carried out for genuine commercial reasons. A genuine commercial reason can include a non-financial reason. Thus, a view that it is important for the future prosperity of a company to maintain family control of that company can be a genuine commercial reason.
Subjects: Law — Accounting.