Taxation (International and Other Provisions) Act 2010

Deduction notices U.K.

232 Deduction notices U.K.

(1) An officer of Revenue and Customs may give a company a notice under this section if—

(a) the company is within the charge to corporation tax, and

(b) the officer considers on reasonable grounds that each of the deduction scheme conditions is or may be met in relation to a transaction to which the company is party.

(2) In this Part—

(a) a notice under this section is referred to as a “deduction notice”, and

(b) “the deduction scheme conditions” means the conditions specified in section 233.

(3) For the consequences of a deduction notice, see section 243.

233 The deduction scheme conditions U.K.

(1) This section sets out the deduction scheme conditions.

(2) Deduction scheme condition A is that the transaction to which the company is party forms part of a scheme that is a deduction scheme for the purposes of this Part (see sections 236 to 242).

(3) Deduction scheme condition B is that the scheme is such that for corporation tax purposes the company—

(a) is in a position to claim, or has claimed, an amount by way of deduction in respect of the transaction, or

(b) is in a position to set off, or has set off, an amount relating to the transaction against profits in an accounting period.

(4) Deduction scheme condition C is that the main purpose of the scheme, or one of its main purposes, is to achieve a UK tax advantage for the company.

(5) Deduction scheme condition D is that the amount of the UK tax advantage is more than minimal.

234 Schemes achieving UK tax advantage for a company U.K.

(1) For the purposes of section 233, a scheme achieves a UK tax advantage for a company if, in consequence of the scheme, the company is in a position to obtain, or has obtained—

(a) a relief or increased relief from corporation tax,

(b) a repayment or increased repayment of corporation tax, or

(c) the avoidance or reduction of a charge to corporation tax.

(2) In subsection (1)(a) “relief from corporation tax” includes a tax credit under section 1109 of CTA 2010 (tax credits for certain recipients of qualifying distributions) for the purposes of corporation tax.

(3) For the purposes of subsection (1)(c) avoidance or reduction may, in particular, be effected—

(a) by receipts accruing in such a way that the recipient does not pay or bear tax on them, or

(b) by a deduction in calculating profits or gains.

235 Further provisions about deduction notices U.K.

(1) A deduction notice must specify the transaction in relation to which the officer of Revenue and Customs considers that each of the deduction scheme conditions is or may be met.

(2) A deduction notice must specify the accounting period in relation to which the officer considers that deduction scheme condition B is or may be met in relation to the transaction.

(3) A deduction notice must inform the company to which it is given that, as a result of the service of the notice, section 243(2) to (6) (consequences of a deduction notice) will apply if each of the deduction scheme conditions is met in relation to the transaction.

(4) A deduction notice may relate to two or more transactions.