In general, ‘reflections’ tokens appear to pay the holder a reward (more of the same token) every time someone else makes a transaction in that token. The tokens are pre-determined to pay out this reward to holders (usually referred to as a tax on transactions).
It is most likely HMRC will treat the rewards as non taxable airdrops, rather than taxable miscellaneous income. This is on the basis that nothing was done by the holder in order to receive the reward.
The additional cryptoassets received a reflection reward will be subject to the capital gains tax regime when they are disposed of.
If the smart contract is executed and the airdropped tokens are issued into one public address and then later they are transferred to the recipient it may be possible to argue that the acquisition cost of the airdropped tokens is the sterling market value at the date of receipt, but only if it can be argued that a ‘bargain made otherwise than at arm's length’. There is uncertainty as to whether or not a ‘bargain is made otherwise than at arm's length’ or not, when it is available to everyone. If it is not a bargain otherwise than at arm’s length, the CGT acquisition cost of the airdropped tokens would be Nil.
If when the smart contract is executed, the airdropped tokens are issued directly to the recipient, it will be Nil acquisition cost. As there is no corresponding disposal, the market value rule at Section 17 TCGA 1992 is disapplied and the actual amount paid for the airdrop (ie Nil) is the CGT acquisition cost where it is lower than the market value at the date of receipt).