CTM08238 | Corporation Tax: management expenses: targeted anti-avoidance rule (TAAR) - tax advantage

Most schemes to which CTA09/S1248 applies are likely to be cases where a deduction for expenses of management is either created or inflated. But the rule also applies where any tax advantage is secured. The definition of tax advantage is taken from CTA10/S1139 and is wide-ranging:

(1) This section has effect for the purposes of the provisions of the Corporation Tax Acts which apply this section;

(2) “Tax advantage” means—

(a) a relief from tax or increased relief from tax,

(b) a repayment of tax or increased repayment of tax,

(c) the avoidance or reduction of a charge to tax or an assessment to tax,

(d) the avoidance of a possible assessment to tax,

(da) the avoidance or reduction of a charge or assessment to a charge under TIOPA10/PART9A (controlled foreign companies),

(e) the avoidance or reduction of a charge or assessment to the bank levy under FA11/SCH19 (the bank levy)

(f) the avoidance or reduction of a charge to diverted profits tax.

(3) For the purposes of CTA10/S1139 (2)(c) and (d) it does not matter whether the avoidance or reduction is effected—

(a) by receipts accruing in such a way that the recipient does not pay or bear tax on them, or

(b) by a deduction in calculating profits or gains.

(3A) The avoidance or reduction of a charge or assessment to the bank levy as a result of arrangements to which any of FA11/SCH19/PARA47 (7) to (12) any of apply.

(4) In this section “relief from tax” includes—

(a) a tax credit under CTA10/S1109 for the purposes of corporation tax, and

(b) a tax credit under ITTOIA05/S397 (1) or S397A (1) for the purposes of income tax.

The definition covers relief, repayments, the amount of a charge, and the assessment of Corporation Tax.