Foreign Permanent Establishments of UK Companies: anti-diversion rule: proportionate reduction where motive test not met
This applies for relevant periods beginning before 1 January 2013.
CTA09/S18I is in point where condition B of the motive test is met (which should be the case where there has been no major change to the business over the relevant period), but condition A is not. In those cases the provision permits a just and reasonable reduction, calculated by reference to the “tainted transactions” within condition A, to the relevant profits amount.
For the purposes of S18I, tainted transactions are those which achieve a reduction in UK tax and do not meet the condition in S18H(2)(b).