CTM08232 | Corporation Tax: management expenses: targeted anti-avoidance provision (TAAR) - general

The TAAR is wide-ranging in nature. It targets all tax avoidance schemes generating contrived management expenses or in which a claim to management expenses is involved, not just those schemes of which HMRC is already aware.

The TAAR is intended to deter companies from entering into such schemes. It targets arrangements which create or increase relief for expenses of management and schemes involving these expenses which seek to create any other tax advantage.

The effect is that the management expenses which are incurred as part of the arrangements are not eligible for relief. The underlying principle is that relief for expenses of management should only be available where a company has genuinely incurred expenditure in the course of managing its investment business.

Where the effect of the arrangements is to increase a deduction for particular expenses of management, then not only does the company lose the benefit of the increase but also any original expenses involved in the arrangements which may or may not otherwise be genuine expenses of management. However genuine expenses of management unconnected to any arrangements caught by the TAAR are unaffected and remain eligible for relief.