Part 2Income tax, corporation tax and capital gains tax
Chapter 4Avoidance involving tax arbitrage
24Deduction cases
(1)
If the Commissioners for Her Majesty’s Revenue and Customs consider, on reasonable grounds, that conditions A to D are or may be satisfied in relation to a transaction to which a company falling within subsection (2) is party, they may give the company a notice under this section.
(2)
A company falls within this subsection if—
(a)
it is resident in the United Kingdom, or
(b)
it is resident outside the United Kingdom but is within the charge to corporation tax.
(3)
Condition A is that the transaction to which the company is party forms part of a scheme that is a qualifying scheme.
(4)
Condition B is that the scheme is such that for the purposes of corporation tax the company is in a position to claim or has claimed an amount by way of deduction in respect of the transaction or is in a position to set off or has set off against profits in an accounting period an amount relating to the transaction.
(5)
Condition C is that the main purpose, or one of the main purposes, of the scheme is to achieve a UK tax advantage for the company.
(6)
Condition D is that the amount of the UK tax advantage in question is more than a minimal amount.
(7)
A notice under this section is a notice—
(a)
specifying the transaction in relation to which the Commissioners consider that conditions A to D are or may be satisfied,
(b)
specifying the accounting period in relation to which the Commissioners consider that condition B is or may be satisfied as regards the transaction, and
(c)
informing the company that as a consequence section 25 (rules relating to deductions) has effect in relation to the transaction.
(8)
Nothing in this section prevents the Commissioners from giving a company falling within subsection (2) a notice under this section as regards two or more transactions.
(9)
Schedule 3 makes provision about what constitutes a qualifying scheme.