INTM489695 | Diverted Profits Tax: application of Diverted Profits Tax: legislation – Finance Act 2015 – core provisions: consequences of section 86 applying

There is a distinction between the calculation of the provisional charge and its final determination. The initial estimated charge is calculated in accordance with section 97 by the issue of a charging notice. The tax charged in this notice may not be postponed on any grounds and must be paid within 30 days of the date the notice is issued (see INTM489942). The guidance in the following paragraphs sets out how the ultimate charge is determined. Guidance on the calculation of the initial estimated charge is at INTM489720 and guidance on other aspects of the charging notice is in INTM489880 of this guidance.

There are three ways in which taxable diverted profits may be determined in a case where the conditions in section 86 are met, covered by three sections in the legislation: 89, 90 and 91:

• Section 89 sets out how profits are calculated where the tax avoidance condition (but not the mismatch condition) is met.

• Section 90 applies where the mismatch condition is met but profits are calculated by reference to the actual provision.

• Section 91 applies where the mismatch condition is met and profits are calculated by reference to the relevant alternative provision.