EIM47205 | Pt 7A ITEPA 2003: CCG: relevant arrangement

ITEPA 2003: section 554AA(1)(a), (b), section 554AF(3) and (4)

In order for a charge to arise there has to be an arrangement to which the employee or director is party or which otherwise wholly or partly covers or relates to them (“the relevant arrangement”).

The arrangement does not have to cover or relate to the employee personally. Any reference to the employee also includes any person linked to the employee per section 554AF(3). Section 554Z1 defines who is linked with the employee for the purposes of Pt 7A.

The term arrangement is already defined in section 554Z. It can mean any agreement, scheme, settlement, transaction, trust or undertaking. It does not matter whether or not it is legally enforceable.

The intention is to interpret the term broadly. There is no single prescribed form into which an arrangement must fall. It can consist of any number of steps and all the constituent parts of the arrangement must be taken into account.

The legislation is silent on who is responsible for setting up the arrangement. There simply has to be an arrangement as described above.

It also does not matter if the relevant arrangement does not include details of the steps which will or may be taken to provide payments, benefits or loans. It does not need to include how or when any steps will be taken or the form in which they will be taken. Since the arrangement can cover persons linked with the employee, it does not need to detail in whose favour the step will be taken.