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HMRC internal manual

Business Income Manual

Profits from a trade of dealing in or developing UK land: Anti-fragmentation: Fragmented activities overview

The legislation contains specific provisions to prevent profits being fragmented between associated parties and placed outside the charge to corporation tax or income tax. The anti-avoidance provisions to prevent fragmentation are located at Section 356OH CTA 2010 and Section 517H ITA 2007.

The rules are aimed at a situation where a number of connected persons act together to carry out development activity that amounts in substance to a single trade of UK property development.


Where the conditions are met the profits or gains of the connected parties will be combined and the person making the disposal will be taxed on the whole amount.

If a relevant contribution is made by an associated party and the profit will already be brought into account as income in calculating profits, for UK corporation tax or income tax purposes there will be no extra profit to assess.

Where an amount is taxed by another jurisdiction unilateral relief may be available and/or an application for the Mutual Agreement Procedure (MAP) may be made.

Guidance on the MAP can be found at INTM423000.