Commentary on Sections Overview Overview Section 178: The no tax avoidance requirement
588.This section requires that there be commercial reasons for the issue of the relevant shares and that a main purpose is not tax avoidance. It is based on section 289(6) of ICTA.
589.There is a complementary requirement in respect of the subscription for the shares in Chapter 2.
590.To be consistent with related legislation, for example, in paragraph 14 of Schedule 15 to FA 2000 (corporate venturing scheme), this section refers to “commercial reasons” rather than “commercial purposes”.