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HMRC internal manual

Corporate Finance Manual

From
HM Revenue & Customs
Updated
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Debt cap: anti-avoidance rules: EEA financing income: particular avoidance: examples

The type of schemes that are likely to be caught by the anti-avoidance rules covering Chapter 5 of TIOPA10/PT7

TIOPA10/S311 contains the anti-avoidance rules that are intended to prevent manipulation of the rules within Chapter 5. In direct terms this means the anti-avoidance rules are intended to counter schemes that

  • secure the payer is a relevant associate of the payee at the time of payment; or
  • secure the payer is resident and liable to tax in an EEA state (apart from the UK); or
  • secure the payer denied tax relief for the payment of the financing income amount.

The type of schemes that are likely to be caught by the anti-avoidance rules in TIOPA10/S311 include

  • Schemes that switch ownership of the company paying the financing income amount for a short period of time.
  • Schemes where the company paying the financing income amount is sold for an amount that reflects the benefit of the financing income being exempt from corporation tax.
  • Schemes where financing arrangements are structured so that financing income amounts are passed through an EEA resident group company from a group company resident outside the EEA.
  • Schemes that secure that no tax deduction is given in respect of the financing income paid to the UK, but ensure that a taxable deduction of some form is given that relates in some way to the finance income.