Section 87 | Section 83(2) and (4): schemes that would reduce a person's tax liability

(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 (“P”) 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 foreign tax.

(2)The condition is that amount A is less than amount B.

(3)Amount A is the total amount of UK tax payable by P and such persons (if any) as are connected with P in respect of income and chargeable gains arising in the chargeable period.

(4)Amount B is the total amount of UK tax that would be payable by P and such persons (if any) as are connected with P in respect of income and chargeable gains arising in the chargeable period if, in determining that amount, the transactions forming part of the scheme or arrangement were disregarded.

(5)In this section “UK tax” means income tax, corporation tax and capital gains tax.

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

(7)For the purposes of this section, whether a person is connected with P is determined in accordance with section 1122 of CTA 2010.