What counts as 'arrangements' under section 455C of the Corporation Tax Act 2009?

Under section 455C, 'arrangements' is defined very broadly. It includes any agreement, understanding, scheme, transaction, or series of transactions, whether or not legally enforceable. This wide definition ensures that even informal or uncommitted steps forming part of a tax avoidance strategy can be caught by the anti-avoidance rule in section 455B.

When do arrangements become 'relevant avoidance arrangements' under section 455C?

Arrangements become 'relevant avoidance arrangements' if one of their main purposes is to enable a company to obtain a loan-related tax advantage. The test does not require this to be the sole or dominant purpose. However, arrangements are excluded if the resulting tax advantages are consistent with the principles and policy objectives of the relevant loan relationships legislation.

What is a 'loan-related tax advantage' under section 455C of CTA 2009?

A loan-related tax advantage arises where a company claims a debit it is not entitled to, inflates a debit beyond its proper amount, avoids or reduces a credit, or manipulates the timing of debits or credits. All such debits and credits relate specifically to the loan relationships rules in Part 5 of the Corporation Tax Act 2009.

How does the legislative purpose safeguard in section 455C protect legitimate tax planning?

Arrangements are not treated as relevant avoidance arrangements if the tax advantages they produce can reasonably be regarded as consistent with the principles and policy objectives of the applicable loan relationships provisions. This safeguard prevents the anti-avoidance rule from catching straightforward, legitimate tax planning that operates within the intended scope of the legislation.

Corporation Tax Act 2009 section 455C

Interpretation of section 455B

Section 455C defines the key terms used in the anti-avoidance rule in section 455B, including what counts as "arrangements", "relevant avoidance arrangements", and a "loan-related tax advantage".

"Arrangements" is broadly defined to include any agreement, understanding, scheme, transaction, or series of transactions, whether or not legally enforceable
Arrangements are "relevant avoidance arrangements" if one of their main purposes is to enable a company to obtain a loan-related tax advantage
However, arrangements are excluded from that definition if the tax advantages they produce are consistent with the principles and policy objectives underlying the relevant loan relationships legislation
A "loan-related tax advantage" arises where a company claims an undue debit, inflates a debit, avoids or reduces a credit, or shifts the timing of debits or credits under the loan relationships rules

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