Income Tax Act 2007 (c. 3)

Part 15 U.K. Deduction of income tax at source

Modifications etc. (not altering text)

C1 Pt. 15 modified (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), ss. 551(4), 1329(1) (with Pts. 1, 2, Sch. 2 para. 78)

Chapter 8 U.K. Chapters 6 and 7: special provision in relation to royalties

[F1 Tax avoidance U.K.

Textual Amendments

F1 S. 917A and cross-heading inserted (with effect in accordance with s. 41(2) of the amending Act) by Finance Act 2016 (c. 24), s. 41(1) (with s. 41(3)(4))

917A Tax avoidance arrangements U.K.

(1) This section applies if and to the extent that—

(a) a person (“the payer”) makes an intellectual property royalty payment,

(b) the payment is received by a person (“the payee”) who is connected with the payer, and

(c) the payment is made under DTA tax avoidance arrangements.

(2) Any duty under Chapter 6 or 7 to deduct a sum representing income tax at any rate applies without regard to any double taxation arrangements.

(3) Any income tax deducted by virtue of subsection (2) may not be set off under section 967 or 968 of CTA 2010.

(4) In this section—

• “arrangements” (except in the phrase “double taxation arrangements”) includes any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable;

• “DTA tax avoidance arrangements” means arrangements where, having regard to all the circumstances, it is reasonable to conclude that—

  (a)

  the main purpose, or one of the main purposes, of the arrangements was to obtain a tax advantage by virtue of any provisions of a double taxation arrangement, and

  (b)

  obtaining that tax advantage is contrary to the object and purpose of those provisions;

• “intellectual property royalty payment” means a payment referred to in section 906(2)(a) or (3)(a);

• “receive” means receive—

  (a)

  directly or indirectly;

  (b)

  by one payment or by a series of payments;

• “tax advantage” is to be construed in accordance with section 208 of FA 2013.

(5) For the purposes of this section the payer is connected with the payee if the participation condition is met as between them.

(6) Section 148 of TIOPA 2010 (when the participation condition is met) applies for the purposes of subsection (5) as for the purposes of section 147(1)(b) of that Act, but as if references to the actual provision were to the provision made or imposed between the payer and the payee in respect of the arrangements under which the payment is made.]