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HMRC internal manual

International Manual

Arbitrage: legislation and principles: procedures: Format of clearance application: deductions

A Details of scheme participants

Company claiming deduction

* Name of company (and details of any branches including those in the UK)
* Name of ultimate UK parent (if member of a group)
* Nature of the business of company
* Territory of residence
* UK tax office and reference number
* Connection (if any) to recipient and other participants
* Copy of most recent accounts 

Recipient of payment for deduction claimed

* Name of company (and details of any branches including those in the UK)
* Name of ultimate UK parent (if member of a group)
* Nature of the business of company
* Territory of residence
* UK tax office and reference number (where applicable)
* Connection (if any) to company and other participants

Other participants

* Name of each company (and details of any branches including those in the UK)
* Name of ultimate UK parent of each company (if member of a group) 
* Nature of the business of each company
* Territory of residence of each company
* UK tax office and reference number of each company (where applicable)
* Connection (if any) to other participants

B Details of the scheme

Outline description of the proposed scheme

Identification and explanation of the hybrid entities/instruments involved in the scheme

Identification and explanation of the arbitrage(s) arising from the scheme

Nature and amount(s) of the transaction(s) for which the deduction(s) is/are to be claimed

Details of the UK tax advantage(s) arising from the scheme

Estimate of effect on UK tax had the scheme not taken place

Description of the flow of money within the scheme, including its sources and final destinations

C Details of the purpose(s) of the scheme

Explanation of the purpose(s) of the scheme, including its commercial rationale

Explanation of the purpose(s) of the transaction(s) for which deduction(s) is/are to be claimed, including the commercial rationale for each

Explanation of the purpose(s) of other transaction(s) for which deduction(s) is/are to be claimed, including the commercial rationale for each

Reasons, if any, why the transactions could not be carried out without the use of the hybrid and arbitrage

Identification of a suitable comparison to demonstrate either:

* why in the absence of the arbitrage and the hybrid, both the amount of the transaction giving rise to the tax deduction, and its relevant terms and conditions would have been the same; or
* the amount of the additional tax deduction that arises through the use of the scheme

D Disclaimed deduction

In cases where the clearance relates to the amount that must be disclaimed in order to prevent the operation of Rules A and B in the deductions legislation:

* what the amount of the disclaim should be;
* the method by which this amount has been calculated;
* how the disclaim relates to the purpose of the scheme that consists of obtaining a UK tax advantage.