CG44103 | Targeted rules to prevent income to capital converter schemes by companies - definition of tax advantage

For the purposes of section 184G of the Taxation of Chargeable Gains Act (TCGA) 1992, the definition of tax advantage in section 184D TCGA 1992 applies, but the tax advantage must also involve the deduction of lossesfrom the relevant gain.

There are four legs to this definition, which cover relief, repayments, the amount of a charge, and theassessment of corporation tax.

If a tax advantage arises out of a transaction that is part of the arrangements, the legislation asks whether the main purpose or one of the main purposes of the arrangements (referred to as “a main purpose” in this guidance) is to achieve a tax advantage. The purpose of the arrangements is determined by the purpose of the participants in entering into the arrangements. If any participant has a main purpose ofachieving a tax advantage, that will constitute a main purpose of the arrangements.