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.