Corporation Tax Act 2009 section 931N

Schemes involving distributions for which deductions are given

Section 931N is an anti-avoidance rule that removes the tax exemption from distributions where they form part of a tax advantage scheme and a foreign tax deduction is obtained by reference to the distribution.

• A distribution that would normally be exempt loses that exemption if it is part of a tax advantage scheme and a related foreign tax deduction exists
• The foreign deduction must be allowed to a person resident outside the United Kingdom under the tax law of that overseas territory
• The deduction need not relate directly to the distribution itself — it is enough that the deducted amount is determined by reference to the distribution
• This rule supplements the direct rules in sections 931B(c) and 931D(c), which deny exemption where the distribution itself qualifies for a foreign deduction, by catching indirect arrangements designed to achieve the same result through avoidance schemes