BKM406100 | Banking surcharge: targeted anti-avoidance rules: overview

CTA10/S269DN, TIOPA10/S371BI(3)-(10)

These provisions apply to arrangements whenever entered into that seek to avoid or reduce the surcharge. They apply where there are:

• Arrangements that result in a relevant transfer that results in a significant reduction/elimination of banking surcharge profits

• Arrangements that result in a relevant transfer that results in a significant reduction/elimination of CFC chargeable profits of a banking company (BKM406350)

• Arrangements that do not result in a relevant transfer but would have the effect of reducing CFC chargeable profits of a banking company in favour of a non-banking company

And, the main purpose, or one of the main purposes of the arrangements is to avoid, or reduce, a banking company’s surcharge profits or its CFC chargeable profits.

The TAAR is unlikely to apply where a banking company took a decision to transfer a part of its business before the date of the press release introducing the surcharge (8 July 2015). This is because the main purpose, or one of the main purposes of the arrangements cannot have been to avoid or reduce the banking company’s surcharge profits.

However if a banking company took a decision to transfer a part of its business some time before 8 July 2015 and before that date decided not to proceed with the transfer, the TAAR may apply if that decision is reversed after 8 July 2015.

Counteraction - CTA10/S269DN(3), TIOPA10/S371B(5) & (8)-(9)

In each case, where the TAAR applies it will negate the effect of the arrangements so that the surcharge profits of the banking company, for the chargeable accounting period, are to be taken to be what they would have been had the relevant transfer not taken place.