INTM489798 | Diverted Profits Tax: application of Diverted Profits Tax: examples and particular situations: mobile tangible assets

The factors for consideration suggested above include the nature of the asset and its use of in, or its operation from, the UK. For example, certain types of mobile tangible assets may be expected to be used by more than one group company and/or in more than one country through their useful life. This is likely to be relevant to the assumptions in respect of the design of the material provision and those on whether that provision would have been made as structured, absent the effective tax mismatch outcome.

Such assets may be owned by a group company resident in a low tax jurisdiction that leases, or otherwise makes them available, to the operating company or companies that use them. In that sort of arrangement, evidence that the use of an asset, or assets of the same type, has moved, or is realistically expected to move, between territories would be a strong factor in the consideration of whether similarly structured provision would have been made in the absence of any tax reduction. Specific design features of the asset and considerations around redeployment costs may be relevant factors.

Where such assets are designated to be used exclusively in connection with contracts with unconnected third parties it will be important to consider the length and other relevant terms of those contracts. For example, the detail around contract renewal, early termination, provisions for the variation of the contractual terms, etc. are likely to be relevant.

If it was anyway concluded that some alternatively structured provision would have been made, the fact or the realistic expectation of an asset’s movement between the UK and other territories may make any assumption that the alternative provision would have resulted in additional UK profits less likely.