Chapter 6: Tax avoidance
Overview
588.This Chapter provides anti-avoidance rules for the Part. The first rule is targeted at avoidance schemes that manipulate the rules in Chapter 2 in order to avoid the application of the Part to a group of companies that would not otherwise have met the ‘gateway’ conditions in section 261. The second targets schemes to reduce the amount of a disallowance under the debt cap, whether by decreasing the tested expense amount or by increasing the available amount or the tested income amount, or any combination of these. The third rule counters manipulation of the Chapter 5 rules which disregard certain intra-group financing income.
Section 306: Schemes involving manipulation of rules in Chapter 2
589.This section counters schemes that attempt to manipulate the “gateway” conditions. For example, a group that would otherwise fail the test in section 261 (so that the debt cap rules applied) might borrow from a bank at the end of its period of account to boost the “worldwide gross debt” amount defined in section 264, repaying the loan the next day. The section is based on paragraph 47 of Schedule 15 to FA 2009.
Section 307: Schemes involving manipulation of rules in Chapters 3 and 4
590.This section is directed at schemes manipulating the tested expense amount, the tested income amount or the available amount, or any combination of these three by considering the aggregate effect of these three amounts – the “relevant net deduction” – defined in section 308. It is based on paragraph 48 of Schedule 15 to FA 2009.
Section 308: Meaning of “relevant net deduction”
591.This section defines the “relevant net deduction” for the purposes of section 307(2). This is so much of the total disallowed amount (the tested expense amount less the available amount) as cannot be covered by a disregard of financing income of UK group companies. The relevant amount may be nil. The section is based on paragraph 49 of Schedule 15 to FA 2009.
Section 309: Calculation of amounts
592.This section sets out the assumptions to be made for the purposes of section 307. It is based on paragraph 50 of Schedule 15 to FA 2009.
Section 310: Meaning of “carried-back amount” and “carried-forward amount”
593.This section defines the “carried-back amount” and “carried-forward amount” for the purposes of section 307. It is based on paragraph 51 of Schedule 15 to FA 2009.
Section 311: Schemes involving manipulation of rules in Chapter 5
594.This section deals with schemes that manipulate the rules in Chapter 5. Under section 299 financing income received by a United Kingdom company is disregarded for corporation tax purposes where three conditions are met and this section counters a scheme if it has the effect of securing that any of these three section 299 conditions is met and that is the main purpose or one of the main purposes of the scheme. It is based on paragraph 52 of Schedule 15 to FA 2009.
Section 312: Meaning of “scheme” and “excluded scheme”
595.This section defines “scheme” and “excluded scheme” for the purposes of this Chapter. It is based on paragraph 53 of Schedule 15 to FA 2009.