835AU Structured arrangements

Summary

This section sets out what is meant by structured arrangement and provides the rule to neutralise such an outcome.

Details

Structured arrangement mismatch outcome

(1) A structured arrangement mismatch outcome shall arise where a company, within the charge to domestic tax, would reasonably be expected to be aware that—

1. it entered into a structured arrangement,
2. it shared in the value of the tax benefit resulting from the mismatch outcome, and
3. the mismatch outcome has not been neutralised in another territory.

The rule for neutralising a structured arrangement mismatch outcome

(2) A structured arrangement mismatch outcome shall be neutralised by the taxpayer being denied a deduction for so much of the payment as corresponds to the mismatch outcome which has not been neutralised in another territory.

(3) As this chapter requires the anti-hybrid rules to be applied to transactions between other territories the terms “domestic tax” and “foreign tax” need to be modified accordingly.

“domestic tax” means a tax chargeable on profits or gains, under the laws of a territory in which an entity is established, that is similar to income tax, corporation tax (including a charge under Part 35B) or capital gains tax;

“foreign tax” means a tax chargeable on profits or gains, under the laws of a territory in which the entity is not established, that is similar to income tax, corporation tax (including a charge under Part 35B) and capital gains tax.

Relevant Date: Finance Act 2021