BKM307400 - Bank loss restriction: targeted anti-avoidance rule: meaning of tax value and non-tax value – tax value

The tax value is defined as the relevant corporation tax advantage and any economic benefits generated from it. As an example, the tax saved may be reinvested in the business of the company. Any profits arising on that additional capital will be income generated from the tax advantage and will count toward the tax value.

The relevant corporation tax advantage is a corporation tax advantage involving the use of the relevant carried-forward losses against the profits of the arrangement. In the case of the tax value it is the anticipated relevant corporation tax advantage that is important.

Corporation tax advantage is defined in CTA10/S269CK(9) and includes:

• A relief from corporation tax or increased relief from corporation tax
• A repayment of corporation tax or increased repayment of corporation tax
• The avoidance or reduction of a charge to corporation tax or an assessment to corporation tax
• The avoidance of a possible assessment to corporation tax
• The deferral of a payment of corporation tax.

In the case of the relevant carried-forward reliefs, it is the value arising from the increased use of the reliefs in any relevant accounting periods as a consequence of the tax arrangements. In the case of the profits, it is the increased relief against those profits as a consequence of the arrangements. There are likely to be overlaps and interactions between these in order to produce the net corporation tax advantage.

BKM307450 has two tax value examples.