Corporation Tax Act 2009 section 492

Holding coming within section 490: calculation to undo avoidance

Section 492 requires companies to make adjustments to counteract any tax advantages obtained through arrangements connected with holdings in open-ended investment companies, unit trust schemes, or offshore funds that are treated as creditor loan relationships under section 490.

• Where a company holds a relevant holding under section 490 and arrangements are entered into that relate to a relevant fund with a main purpose of obtaining a tax advantage, the company must make adjustments to counteract that advantage.
• The adjustments must neutralise any tax advantage connected with the relevant holding that would otherwise be obtained by the company or any other person, whether directly or indirectly, as a consequence of the arrangements.
• The arrangements may have been entered into before the company held the relevant holding, and the person benefiting from the tax advantage need not be identified at the time the arrangements are made.
• The term "relevant fund" covers not only the fund in which the holding is directly held, but also any fund in which that fund itself has a holding, creating a chain that captures indirect arrangements.