Section 269CK — Corporation Tax Act 2010: Profits arising from tax arrangements to be disregarded

Profits arising from tax arrangements to be disregarded 269CK 1 This section applies if conditions A to C are met.

2 Condition A is that—

a the amount given by step 1 in section 269CD(1) as the total profits of a banking company for an accounting period includes profits which arise to the banking company as a result of any arrangements (“the tax arrangements”),

and b in the absence of those profits (“the additional profits”) any deduction which the banking company would be entitled to make for the accounting period in respect of any relevant carried-forward losses would be reduced.

3 Condition B is that the main purpose, or one of the main purposes, of the tax arrangements is to secure a relevant corporation tax advantage—

a for the banking company, or b if there are any companies connected with that company, for the banking company and those connected companies (taken together).

4 In this section “ relevant corporation tax advantage ” means a corporation tax advantage involving—

a the additional profits, and b the deduction of any relevant carried-forward losses from those profits.

5 Condition C is that, at the time when the tax arrangements were entered into, it would have been reasonable to assume that the tax value of the tax arrangements would be greater than the non-tax value of the tax arrangements.

6 The “tax value” of the tax arrangements is the total value of—

a the relevant corporation tax advantage, and b any other economic benefits derived by—

i the banking company, or ii if there are any companies connected with that company, the banking company and those connected companies (taken together), as a result of securing the relevant corporation tax advantage.

7 The “non-tax value” of the tax arrangements is the total value of any economic benefits, other than those falling within subsection (6)(a) or (b), derived by—

a the banking company, or b if there are any companies connected with that company, the banking company and those connected companies (taken together), as a result of the tax arrangements.

8 If this section applies, the additional profits are not to be taken into account in calculating the banking company's relevant profits for the accounting period (see section 269CD).

9 In this section— “ arrangements ” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable); “ corporation tax advantage ” means—

a relief from corporation tax or increased relief from corporation tax, a repayment of corporation tax or increased repayment of corporation tax, the avoidance or reduction of a charge to corporation tax or an assessment to corporation tax, the avoidance of a possible assessment to corporation tax, or the deferral of a payment of corporation tax or advancement of a repayment of corporation tax.