INTM489590 | Diverted Profits Tax: application of Diverted Profits Tax: legislation – Finance Act 2015 – core provisions: overview of Diverted Profits Tax

Sections 80 and 81 relate to cases where a company with an existing UK taxable presence is party to arrangements involving entities or transactions that lack economic substance. In these cases the calculation of taxable diverted profits follows the rules set out in sections 82 to 85 while section 96 explains how those profits are estimated for the purposes of preliminary and charging notices.

Section 86 deals with cases where a foreign company avoids carrying on a trade in the UK through a UK PE in circumstances where either the mismatch condition applies, because provision is made or imposed between the foreign company and entities where either the transactions or entities lack economic substance, or where there are tax avoidance arrangements. In these cases the calculation of taxable diverted profits follows the rules set out in sections 88 to 91 while section 97 explains how those profits are estimated for the purposes of preliminary and charging notices.