PART 3

Diverted profits tax

Introduction and overview

Overview of Part 3
78
1
Sections 80 and 81 relate to cases involving entities or transactions which lack economic substance.
2
In these cases—
a
sections 82 to 85 deal with the calculation of taxable diverted profits (and ensure appropriate account is taken of any transfer pricing adjustments already made), and
b
section 96 deals with the estimation of those profits when initially imposing a charge.
3
Section 86 relates to cases where, despite activity being carried on in the United Kingdom, a company avoids carrying on its trade in the United Kingdom in circumstances where—
a
provision is made or imposed which involves entities or transactions lacking economic substance, or
b
there are tax avoidance arrangements.
4
In these cases—
a
sections 88 to 91 deal with the calculation of taxable diverted profits, and
b
section 97 deals with the estimation of those profits when initially imposing a charge.
5
There is an exception from section 86 for cases involving limited UK-related sales or expenses (see section 87).
6
Key terms used in this Part are defined in sections 106 to 114.
7
Other provisions in this Part—
- ensure HMRC are notified of companies potentially within the scope of the tax (see section 92);
- deal with the process for imposing a charge to diverted profits tax (see sections 93 to 97);
- deal with payment of the tax and make provision about credits given for other tax paid on the same profits (see sections 98 to 100); and
- provide for reviews of, and appeals against, decisions to impose a charge to diverted profits tax (see sections 101 and 102).