Section 356OH | Fragmented activities ^F1

(1)Subsection (3) applies if—

(a)a company (“C”) disposes of any land in the United Kingdom,

(b)any of conditions A to D in section 356OB is met in relation to the land, and

(c)a person (“R”) who is associated with C at a relevant time has made a relevant contribution to activities falling within subsection (2).

(2)The following activities fall within this subsection—

(a)the development of the land,

(b)any other activities directed towards realising a profit or gain from the disposal of the land.

(3)For the purposes of this Part, the profit or gain (if any) realised by C from the disposal is to be taken to be what that profit or gain would be if R were not a distinct person from C (and, accordingly, as if everything done by or in relation to R had been done by or in relation to C).

(4)Subsection (5) applies to any amount which is paid (directly or indirectly) by R to C for the purposes of meeting or reimbursing the cost of corporation tax which C is liable to pay as a result of the application of subsection (3) in relation to R and C.

(5)The amount—

(a)is not to be taken into account in calculating profits or losses of either R or C for the purposes of income tax or corporation tax, and

(b)is not for any purpose of the Corporation Tax Acts to be regarded as a distribution.

(6)In subsection (1) “relevant time” means any time in the period beginning when the activities of the project begin and ending 6 months after the disposal.

(7)For the purposes of this section any contribution made by R to activities falling within subsection (2) is a “relevant contribution” unless the profit made or to be made by R in respect of the contribution is insignificant having regard to the size of the project.

(8)In this section “contribution” means any kind of contribution, including, for example—

(a)the provision of professional or other services, or

(b)a financial contribution (including the assumption of a risk).

(9)For the purposes of this section R is “associated” with C if—

(a)R is connected with C by virtue of any of subsections (5) to (7) of section 1122 (read in accordance with section 1123), or

(b)R is related to C (see section 356OT).

(10)In this section “the project” means all activities carried out for any of the following purposes—

(a)the purposes of dealing in or developing the land, and

(b)any other purposes mentioned in Conditions A to D in section 356OB.