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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 CTA09/S1248 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 CTA10/S1139 and is wide-ranging in its scope:

(1)     This section has effect for the purposes of the provisions of the Corporation Tax Acts which apply this section.

(2)     “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,

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

(da)     the avoidance or reduction of a charge or assessment to a charge under Part 9A of TIOPA 2010 (controlled foreign companies), or

            (e)     the avoidance or reduction of a charge or assessment to the bank levy under        Schedule 19 to FA 2011 (the bank levy).

(3)     For the purposes of subsection (2)(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.

(3A)     The avoidance or reduction of a charge or assessment to the bank levy as a result of arrangements to which paragraph 47 of Schedule 19 to FA 2011 (bank levy: anti- results from arrangements, or part of arrangements, to which any of paragraph 47(7) to (12) of that Schedule applies.

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

(a)     a tax credit under section 1109 for the purposes of corporation tax, and

(b)     a tax credit under section 397(1) or 397A(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.