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HMRC internal manual

Company Taxation Manual

Corporation Tax: management expenses: targeted anti-avoidance rule (TAAR) - tax advantage

Most schemes to which ICTA88/S75(2A) applies are likely to be cases where a deduction for expenses of management is either created or inflated. However for completeness, the rule also applies where any tax advantage is secured. The definition of tax advantage is taken from ICTA88/S840ZA (as inserted by ITA07/SCH1/PARA225) and is wide-ranging in its scope:

(1) In any provision of the Corporation tax Acts in relation to which it is provided that “tax advantage” has the meaning given by this section, “tax advantage” means—

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

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

(c) the avoidance or reduction of a charge to tax or an assessment to tax, or

(d) the avoidance of a possible assessment to tax.

(2)For the purposes of subsection (1)(c) and (d) it does not matter whether the avoidance or reduction is 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.

(3) In this section “relief from tax” includes—

(a) a tax credit under section 231 for the purposes of corporation tax, and

(b) a tax credit under section 397(1) of ITTOIA 2005 for the purposes of income tax.

The definition covers relief, repayments, the amount of a charge, and the assessment of corporation tax.