Finance Act 2006

117 Cancellation of tax advantage U.K.

(1) This section applies if the Commissioners for Her Majesty's Revenue and Customs think that a company to which this Part applies has tried to obtain a tax advantage for itself or another person.

(2) The Commissioners may give a notice to the company specifying the tax advantage.

(3) If the Commissioners give a notice to the company under subsection (2)—

(a) a tax advantage obtained by the company shall be counteracted, in accordance with the notice, by an adjustment by way of—

(i) an assessment;

(ii) the cancellation of a right of repayment;

(iii) a requirement to return a repayment already made;

(iv) the computation or recomputation of profits or gains, or liability to tax, on a basis specified by the Commissioners in the notice, and

(b) the Commissioners may (in addition to the adjustment under paragraph (a)) assess the company to such additional amount of corporation tax F1 ... as they think is equivalent to the value of the tax advantage.

(4) For the purposes of this section “tax advantage” has the meaning given by [F2 section 840ZA] of ICTA (and includes, in particular, entering into arrangements the sole or main purpose of which is to avoid or reduce a charge to tax under section 112).

(5) But a company does not obtain a tax advantage by reason only of this Part applying to it, unless it does anything (whether before or during the application of this Part) which in the Commissioners' opinion is wholly or principally designed—

(a) to create or inflate or apply a loss, deduction or expense (whether or not suffered or incurred by the company), or

(b) to have another effect of a kind specified for the purposes of this subsection by regulations made by the Treasury.

(6) Where a notice is given to a company under subsection (2), the company may appeal F3 ....

(7) An appeal must be instituted by notice given in writing to the Commissioners for Her Majesty's Revenue and Customs during the period of 30 days beginning with the date on which the notice under subsection (2) is given to the company.

[F4 (8) On an appeal under subsection (7) [F5 that is notified to the tribunal, the tribunal] may—

(a) quash the notice,

(b) affirm the notice, or

(c) vary the notice.]

Textual Amendments

F1 Words in s. 117(3)(b) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 687, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F2 S. 117(4) substituted (6.4.2007 with effect as mentioned in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, Sch. 1 para. 618 (with transitional provisions and savings in Sch. 2)

F3 Words in s. 117(6) omitted (1.4.2009) by virtue of The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 447(2)

F4 S. 117(8) inserted (with effect as mentioned in s. 52(2) of the amending Act) by Finance Act 2007 (c. 11), s. 52, Sch. 17 para. 8

F5 Words in s. 117(8) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 447(3)

Modifications etc. (not altering text)

C1 S. 117 applied (1.1.2007) by The Real Estate Investment Trusts (Joint Ventures) Regulations 2006 (S.I. 2006/2866), reg. 7(4)

S. 117 applied (1.1.2007) by The Real Estate Investment Trusts (Joint Ventures) Regulations 2006 (S.I. 2006/2866), reg. 13(5) (subject to reg. 14)

C2 S. 117 applied (31.12.2007) by The Real Estate Investment Trusts (Joint Venture Groups) Regulations 2007 (S.I. 2007/3425), reg. 13(4)

S. 117 applied (31.12.2007) by The Real Estate Investment Trusts (Joint Venture Groups) Regulations 2007 (S.I. 2007/3425), reg. 23(4)