Section 85 | Section 83(2) and (4): schemes about effect of paying foreign tax

(1)This section applies to a scheme or arrangement if, under the scheme or arrangement, the condition in subsection (2) is met in relation to a person (“C”) who for a chargeable period has claimed, or is in a position to claim, any credit that under the arrangements is to be allowed for in respect of the payment of an amount of foreign tax (“the FT amount”).

(2)The condition is that, when C entered into the scheme or arrangement, it could reasonably be expected that the effect on the foreign-tax total of the FT amount being paid or payable would be to increase that total by less than amount X.

(3)In subsection (2)—

“the foreign-tax total” means the amount found by—

(a)totalling the amounts of foreign tax paid or payable by the participants in respect of the transaction or transactions forming part of the scheme or arrangement, and

(b)taking into account any reliefs that arise to the participants, including any reliefs arising to any one or more of the participants as a consequence of the FT amount being paid or payable ..., and

“amount X” means the amount allowable to C as a credit in respect of the payment of the FT amount.

(4)In subsection (3)—

“participant” means a person who is party to, or concerned in, the scheme or arrangement, and

“reliefs” means reliefs, deductions, reductions or allowances against or in respect of any tax.

(5)In subsection (1) so far as it relates to capital gains tax “chargeable period” means tax year (see section 288(1ZA) of TCGA 1992).