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5.—(1) The benefits condition is satisfied unless more than 50% of the benefits of the relevant business activity accrue, directly or indirectly, to one or more third parties.
(2) For the purposes of paragraph (1), benefits that accrue to a person in his capacity as a member of a body corporate which controls all of the other members of the group (or, where the body is or will be a member of the group, all of the other members apart from itself) shall not be regarded as accruing to a third party.
(3) The following are benefits of a business activity for the purposes of paragraph (1)—
(a)profits (whether or not distributed);
(b)charges for managing the business activity (including charges for providing staff to manage it);
(c)the amounts, if any, by which any other charges made to the body exceed the open market value(1) of the goods or services concerned.
(4) For the purposes of paragraph (1), if there are no such benefits, the business activity shall be deemed to generate profits of £100.
Section 19(5) of the Value Added Tax Act 1994 defines “open market value”.
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