Husband owns 100% of Company A which is quite profitable and has plenty of cash and distributable reserves.
Wife owns 100% of Company B which has had a poor run in the last few years and is loss making. Company has been kept afloat by husband providing funds so that he is personally owed £100,000 from Company B.
Company B is likely to cease trading very soon. Company A loans Company B £100,000. Company B uses this loan to repay Mr B.
Company B then ceases trading and going forward has nothing except a loan owed to Company A.
Is the above caught by transactions in securities legislation?
This would be done to get £100,000 out of Company A without the husband paying income tax, so there is the tax avoidance motive.
I believe the issuing of the new debt by Company A would be a “transaction in securities” under s684(2).
I think I already have my answer, that it is caught, but wondered what others thoughts might be?