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Part 2U.K.Double taxation relief

Modifications etc. (not altering text)

C1Pt. 2 modified by 1988 c. 1, Sch. 19ABA paras. 26-28 (as inserted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 34(3) (with Sch. 9 paras. 1-9, 22))

C2Pt. 2 applied by 2010 c. 4, s. 269DL(6) (as inserted (with effect in accordance with Sch. 3 Pt. 3 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 3 para. 1)

CHAPTER 2U.K.Double taxation relief by way of credit

Schemes and arrangements designed to increase relief: anti-avoidanceU.K.

[F181Countering effect of avoidance arrangementsU.K.

(1)This section applies if each of conditions A to D of section 82 is met in relation to a person.

(2)The effects of a scheme or arrangement that are referable to the purpose referred to in condition B of that section are to be counteracted by the making of such adjustments as are necessary.

(3)Any adjustments required to be made by this section (whether or not by an officer of Revenue and Customs) may be made by way of—

(a)an assessment,

(b)the modification of an assessment, or

(c)amendment or disallowance of a claim,

or otherwise.]

Textual Amendments

F1S. 81 substituted (with effect in accordance with s. 31(6) of the amending Act) by Finance Act 2018 (c. 3), s. 31(2)

82Conditions for the purposes of section 81(1)U.K.

(1)Conditions A to D are the conditions mentioned in section 81(1).

(2)Condition A is that, in respect of any income or chargeable gain—

(a)taken into account for the purposes of determining a person's liability to UK tax in a chargeable period, or

(b)to be taken into account for the purposes of determining a person's liability to UK tax in a chargeable period,

there is an amount of foreign tax for which, under the arrangements, credit is allowable against UK tax for the period.

(3)Condition B is that there is a scheme or arrangement the main purpose of which, or one of the main purposes of which, is to cause an amount of foreign tax to be taken into account in the person's case for the period.

(4)Condition C is that the scheme or arrangement is within section 83.

(5)Condition D is that T is more than a minimal amount, where T is the sum of—

(a)the total amount of the claims for credit that the person has made, or is in a position to make, for the period (“the counteraction period”), and

(b)the total amount of all connected-person claims.

(6)In subsection (5) “connected-person claim” means a claim that any person connected to the person has made, or is in a position to make, for any chargeable period that overlaps the counteraction period by at least one day.

(7)In this section—

(8)Section 286 of TCGA 1992 (meaning of “connected”) applies for the purposes of subsection (6) so far as applying in relation to capital gains tax.

83Schemes and arrangements referred to in section 82(4)U.K.

(1)For the purposes of section 82(4), a scheme or arrangement is within this section if it is within subsection (2) or (4).

(2)A scheme or arrangement is within this subsection if—

(a)it is not an underlying-tax scheme or arrangement, and

(b)one or more of sections 84 to 88 apply to it.

(3)For the purposes of this section, a scheme or arrangement is an “underlying-tax” scheme or arrangement if its main purpose, or one of its main purposes, is to cause an amount of underlying tax allowable in respect of a dividend paid by an overseas-resident body corporate to be taken into account in a person's case.

(4)A scheme or arrangement is within this subsection if—

(a)it is an underlying-tax scheme or arrangement, and

(b)one or more of sections 84 to 88 would, on the assumption in subsection (5), apply to it.

(5)The assumption is that the body corporate is resident in the United Kingdom.

(6)Nothing in subsection (5) requires it to be assumed that there is any change in the place or places at which the body corporate carries on its activities.

(7)In subsection (3) “overseas-resident” means resident in a territory outside the United Kingdom.

84Section 83(2) and (4): schemes enabling attribution of foreign taxU.K.

(1)This section applies to a scheme or arrangement if—

(a)the scheme or arrangement enables a participant to pay, in respect of a source of income or chargeable gain, an amount of foreign tax, and

(b)all or part of that amount of foreign tax is properly attributable to another source of income or chargeable gain.

(2)In subsection (1) “participant” means a person who is party to, or concerned in, the scheme or arrangement.

85Section 83(2) and (4): schemes about effect of paying foreign taxU.K.

(1)This section applies to a scheme or arrangement if, under the scheme or arrangement, the condition in subsection (2) is met in relation to a person (“C”) who for a chargeable period has claimed, or is in a position to claim, any credit that under the arrangements is to be allowed for [F2in respect of the payment of an amount of foreign tax (“the FT amount”)].

[F3(2) The condition is that, when C entered into the scheme or arrangement, it could reasonably be expected that the effect on the foreign-tax total of the FT amount being paid or payable would be to increase that total by less than amount X.]

(3)In [F4subsection (2)]

(4)In subsection (3)—

(5)In subsection (1) so far as it relates to capital gains tax “chargeable period” means tax year (see section 288(1ZA) of TCGA 1992).

Textual Amendments

F2Words in s. 85(1) substituted (with effect in accordance with Sch. 11 para. 5(3) of the amending Act) by Finance Act 2010 (c. 13), Sch. 11 para. 5(1)(a)

F3S. 85(2) substituted (with effect in accordance with Sch. 11 para. 5(3) of the amending Act) by Finance Act 2010 (c. 13), Sch. 11 para. 5(1)(b)

F4Words in s. 85(3) substituted (with effect in accordance with Sch. 11 para. 5(3) of the amending Act) by Finance Act 2010 (c. 13), Sch. 11 para. 5(1)(c)(i)

F5Words in s. 85(3) substituted (with effect in relation to amounts of foreign tax payable on or after 21.10.2009 in accordance with Sch. 11 para. 3 of the amending Act) by Finance Act 2010 (c. 13), Sch. 11 para. 2(3)

F6Words in s. 85(3) omitted (with effect in accordance with Sch. 11 para. 5(3) of the amending Act) by virtue of Finance Act 2010 (c. 13), Sch. 11 para. 5(1)(c)(ii)

[F785ASection 83(2) and (4): schemes involving deemed foreign taxU.K.

(1)This section applies to a scheme or arrangement if in relation to a claimant—

(a)an amount (“amount X”) is treated by virtue of a provision of the Tax Acts as if it were an amount of foreign tax paid or payable [F8by the claimant] in respect of a source of income, and

(b)condition A or B is met.

(2)Condition A is met if, when the claimant entered into the scheme or arrangement, it could reasonably be expected that, under the scheme or arrangement, no real foreign tax would be paid or payable by a participant.

(3)Condition B is met if, when the claimant entered into the scheme or arrangement, it could reasonably be expected that, under the scheme or arrangement—

(a)an amount of real foreign tax (“the RFT amount”) would be paid or payable by a participant, but

(b) the effect on the foreign-tax total of the RFT amount being so paid or payable would be to increase the foreign-tax total by less than the amount allowable to the claimant as a credit in respect of amount X.

(4)In this section—

Textual Amendments

F7S. 85A inserted (with effect in accordance with Sch. 11 para. 4(2)(3) of the amending Act) by Finance Act 2010 (c. 13), Sch. 11 para. 4(1)

F8Words in s. 85A(1)(a) omitted (with effect in accordance with Sch. 11 para. 5(3) of the amending Act) by virtue of Finance Act 2010 (c. 13), Sch. 11 para. 5(2)(a)

F9Words in s. 85A(4) omitted (with effect in accordance with Sch. 11 para. 5(3) of the amending Act) by virtue of Finance Act 2010 (c. 13), Sch. 11 para. 5(2)(b)

F10Words in s. 85A(4) omitted (1.1.2014) by virtue of Finance Act 2013 (c. 29), Sch. 1 para. 52, Sch. 29 para. 48(2)

86Section 83(2) and (4): schemes about claims or elections etcU.K.

(1)This section applies to a scheme or arrangement if F11...—

(a)a step is taken by a participant, or

(b)a step that could have been taken by a participant is not taken,

and that action or failure to act has the effect of increasing, or giving rise to, a claim by a participant for an allowance by way of credit under this Part.

(2)The steps mentioned in subsection (1) are steps that may be taken—

(a)under the law of any territory, or

(b)under double taxation arrangements made in relation to any territory.

(3)The steps mentioned in subsection (1) include—

(a)claiming, or otherwise securing the benefit of, reliefs, deductions, reductions or allowances, and

(b)making elections for tax purposes.

[F12(3A)Reference in subsection (1) to a step that is taken or not taken by a participant includes one that was taken or not taken by a participant before the scheme or arrangement was made.

(3B)The reason for taking or not taking a step does not matter so long as it has the effect mentioned in subsection (1).]

(4)In subsection (1) “participant” means a person who is party to, or concerned in, the scheme or arrangement.

Textual Amendments

F11Words in s. 86(1) omitted (with effect in accordance with Sch. 11 para. 6(2) of the amending Act) by virtue of Finance Act 2010 (c. 13), Sch. 11 para. 6(1)(a)

F12S. 86(3A)(3B) inserted (with effect in accordance with Sch. 11 para. 6(2) of the amending Act) by Finance Act 2010 (c. 13), Sch. 11 para. 6(1)(b)

87Section 83(2) and (4): schemes that would reduce a person's tax liabilityU.K.

(1)This section applies to a scheme or arrangement if, under the scheme or arrangement, the condition in subsection (2) is met in relation to a person [F13(“P”)] who for a chargeable period has claimed, or is in a position to claim, any credit that under the arrangements is to be allowed for foreign tax.

(2)The condition is that amount A is less than amount B.

(3)Amount A is [F14the total amount of UK tax payable by P and such persons (if any) as are connected with P] in respect of income and chargeable gains arising in the chargeable period.

(4)Amount B is [F15the total amount of UK tax that would be payable by P and such persons (if any) as are connected with P] in respect of income and chargeable gains arising in the chargeable period if, in determining that amount, the transactions forming part of the scheme or arrangement were disregarded.

(5)In this section “UK tax” means income tax, corporation tax and capital gains tax.

(6)In this section so far as it relates to capital gains tax “chargeable period” means tax year (see section 288(1ZA) of TCGA 1992).

[F16(7)For the purposes of this section, whether a person is connected with P is determined in accordance with section 1122 of CTA 2010.]

Textual Amendments

F13Letter in s. 87(1) inserted (with effect in accordance with s. 31(7) of the amending Act) by Finance Act 2018 (c. 3), s. 31(3)(a)

F14Words in s. 87(3) substituted (with effect in accordance with s. 31(7) of the amending Act) by Finance Act 2018 (c. 3), s. 31(3)(b)

F15Words in s. 87(4) substituted (with effect in accordance with s. 31(7) of the amending Act) by Finance Act 2018 (c. 3), s. 31(3)(c)

F16S. 87(7) inserted (with effect in accordance with s. 31(7) of the amending Act) by Finance Act 2018 (c. 3), s. 31(3)(d)

88Section 83(2) and (4): schemes involving tax-deductible paymentsU.K.

(1)This section applies to a scheme or arrangement if the scheme or arrangement includes—

(a)the making by a person (“P”) of a relevant payment or payments, and

(b)the giving, in respect of the payment or payments, of qualifying consideration.

(2)For the purposes of subsection (1), a payment is a “relevant payment” if all or part of it may be brought into account—

(a)in calculating P's income for the purposes of income tax or corporation tax, or

(b)in calculating P's chargeable gains for the purposes of capital gains tax.

(3)For the purposes of subsection (1), consideration is “qualifying consideration” if—

(a)all or part of it consists of a payment made to P or a person connected with P, and

(b)tax is chargeable in respect of the payment under the law of a territory outside the United Kingdom.

(4)In this section “payment” includes a transfer of money's worth.

(5)For the purposes of this section, whether a person is connected with another is determined in accordance with section 1122 of CTA 2010.

F1789Contents of counteraction noticeU.K.

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Textual Amendments

F17Ss. 89-95 omitted (with effect in accordance with s. 31(6) of the amending Act) by virtue of Finance Act 2018 (c. 3), s. 31(4)

F1790Consequences of counteraction noticesU.K.

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Textual Amendments

F17Ss. 89-95 omitted (with effect in accordance with s. 31(6) of the amending Act) by virtue of Finance Act 2018 (c. 3), s. 31(4)

F1791Counteraction notices given before tax return madeU.K.

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Textual Amendments

F17Ss. 89-95 omitted (with effect in accordance with s. 31(6) of the amending Act) by virtue of Finance Act 2018 (c. 3), s. 31(4)

F1792Counteraction notices given after tax return madeU.K.

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Textual Amendments

F17Ss. 89-95 omitted (with effect in accordance with s. 31(6) of the amending Act) by virtue of Finance Act 2018 (c. 3), s. 31(4)

F1793Amendment, closure notices and discovery assessments in section 92 casesU.K.

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Textual Amendments

F17Ss. 89-95 omitted (with effect in accordance with s. 31(6) of the amending Act) by virtue of Finance Act 2018 (c. 3), s. 31(4)

F1794Information made available for the purposes of section 92(4)U.K.

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Textual Amendments

F17Ss. 89-95 omitted (with effect in accordance with s. 31(6) of the amending Act) by virtue of Finance Act 2018 (c. 3), s. 31(4)

F1795Interpretation of sections 89 to 94U.K.

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Textual Amendments

F17Ss. 89-95 omitted (with effect in accordance with s. 31(6) of the amending Act) by virtue of Finance Act 2018 (c. 3), s. 31(4)