Section 938P | Meaning of “tax mismatch scheme”

(1)A scheme is a tax mismatch scheme if condition A or B is met.

(2)Condition A is that, at the time the scheme is entered into, there is no practical likelihood that the scheme will fail to secure a relevant tax advantage of £2 million or more.

(3)The Treasury may by order substitute a higher amount for the amount for the time being specified in subsection (2).

(4)Any such substitution is to have effect in relation to schemes entered into on or after the day on which the order comes into force.

(5)Condition B is that—

(a)the purpose, or one of the main purposes, of the company in entering into the scheme is to obtain the chance of securing a relevant tax advantage (of any amount), and

(b)at the time the scheme is entered into—

(i)there is no chance that the scheme will secure a relevant tax disadvantage, or

(ii)there is such a chance, but the expected value of the scheme is nevertheless a positive amount.

(6)If, at the time the company enters into the scheme, there are chances that the scheme would, if carried out, secure different relevant tax advantages or disadvantages in different circumstances, the amounts and probabilities of each must be taken into account in determining the expected value of the scheme.

(7)In determining whether condition A or B is met, it is to be assumed that the parties to the scheme carry it out.

(8)Where, at the time the scheme is entered into, the length of the scheme period is uncertain, condition A or B is met if it would be met on any reasonable assumption as to the length of the scheme period.

(9)In determining whether condition A or B is met, section 938O (scheme profits and losses to be left out of account) is to be disregarded.