SCHEDULE 28AA Provision not at arm’s length
Special provision for companies carrying on ring fence trades
11
(1)
This paragraph applies where any person (“the taxpayer") carries on as, or as part of, a trade any activities (“the ring fence trade") which, in accordance with section 492(1) F1above or section 16(1) of ITTOIA 2005 either—
(a)
fall to be treated for any tax purposes as a separate trade, distinct from all other activities carried on by him as part of the trade; or
(b)
would so fall if the taxpayer did carry on any other activities as part of that trade.
(2)
F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
Subject to paragraph 10 above and sub-paragraph (4) below, this Schedule shall have effect as respects any provision made or imposed by the taxpayer as between the ring fence trade and any other activities carried on by him as if—
(a)
that trade and those activities were carried on by two different persons;
(b)
that provision were made or imposed as between those two persons by means of a transaction;
(c)
a potential advantage in relation to United Kingdom taxation were conferred by that provision on each of those two persons; F3and
(d)
those two persons were both controlled by the same person at the time of the making or imposition of that provision; F4. . .
(e)
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)
This Schedule shall apply in accordance with this paragraph in relation to any provision mentioned in sub-paragraph F6. . . (3) above only where the effect of its application in relation to that provision is either—
(a)
that a larger amount (including, if there would not otherwise have been profits, an amount of more than nil) is taken for tax purposes to be the amount of the profits of the ring fence trade for any chargeable period; or
(b)
that a smaller amount (including nil) is taken for tax purposes to be the amount for any chargeable period of any losses of that trade.