Section 356OH — Corporation Tax Act 2010: Fragmented activities

Fragmented activities 356OH 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.