PART 1Income Tax, Corporation Tax and Capital Gains Tax
CHAPTER 5Other provisions
Miscellaneous
78Relationship between rules prohibiting and allowing deductions
1
In section 31 of ITTOIA 2005 (trade profits: relationship between rules prohibiting and allowing deductions)—
a
after subsection (1) insert—
1A
But, if the relevant permissive rule would allow a deduction in calculating the profits of a trade in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—
a
does not have priority under subsection (1)(a), and
b
is subject to any relevant prohibitive rule in this Part (and to the provisions mentioned in subsection (1)(b)).”, and
b
after subsection (3) insert—
4
In this section “relevant tax avoidance arrangements” means arrangements—
a
to which the person carrying on the trade is a party, and
b
the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).
“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
2
In section 274 of ITTOIA 2005 (property businesses: relationship between rules prohibiting and allowing deductions)—
a
after subsection (1) insert—
1A
But, if the relevant permissive rule would allow a deduction in calculating the profits of a property business in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—
a
does not have priority under subsection (1)(a), and
b
is subject to any relevant prohibitive rule in this Part (and to the provisions mentioned in subsection (1)(b)).”, and
b
after subsection (3) insert—
3A
In this section “relevant tax avoidance arrangements” means arrangements—
a
to which the person carrying on the property business is a party, and
b
the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).
“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
3
In section 51 of CTA 2009 (trade profits: relationship between rules prohibiting and allowing deductions)—
a
after subsection (1) insert—
1A
But, if the relevant permissive rule would allow a deduction in calculating the profits of a trade in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—
a
does not have priority under subsection (1)(a), and
b
is subject to any relevant prohibitive rule (and to the provisions mentioned in subsection (1)(b)).
b
after subsection (3) insert—
4
In this section “relevant tax avoidance arrangements” means arrangements—
a
to which the company carrying on the trade is a party, and
b
the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).
“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
4
In section 214 of CTA 2009 (property businesses: relationship between rules prohibiting and allowing deductions)—
a
after subsection (1) insert—
1A
But, if the relevant permissive rule would allow a deduction in calculating the profits of a property business in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—
a
does not have priority under subsection (1)(a), and
b
is subject to any relevant prohibitive rule (and to the provisions mentioned in subsection (1)(b)).
b
after subsection (3) insert—
3A
In this section “relevant tax avoidance arrangements” means arrangements—
a
to which the company carrying on the property business is a party, and
b
the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).
“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
5
The amendments made by this section have effect in relation to deductions in respect of amounts which arise directly or indirectly in consequence of, or otherwise in connection with—
a
arrangements which are entered into on or after 21 December 2012, or
b
any transaction forming part of arrangements which is entered into on or after that date.
6
But those amendments do not have effect where the arrangements are, or any such transaction is, entered into pursuant to an unconditional obligation in a contract made before that date.
7
“An unconditional obligation” means an obligation which may not be varied or extinguished by the exercise of a right (whether under the contract or otherwise).