What is the purpose of section 291B of the Corporation Tax Act 2010?

Section 291B is a targeted anti-avoidance rule that allows HMRC to counteract any tax advantage obtained through arrangements designed to exploit the tariff receipts rules in section 291. It ensures that oil-related tariff income from pipelines and processing facilities is correctly taxed within ring fence profits under United Kingdom corporation tax law.

When does the anti-avoidance rule in section 291B apply?

The rule applies where an arrangement has been entered into and one of its main purposes is to obtain a tax advantage by reference to section 291. This is a purpose-based test, meaning obtaining a tax advantage need not be the sole purpose — it only needs to be one of the main purposes of the arrangement.

How does HMRC counteract a tax advantage under section 291B?

HMRC counteracts the tax advantage by making just and reasonable adjustments. These may include raising a new assessment, modifying an existing assessment, amending or disallowing a claim, or using any other appropriate means. This gives HMRC broad flexibility in how it implements the counteraction to restore the correct tax position.

How are 'arrangement' and 'tax advantage' defined under section 291B?

An 'arrangement' is defined very broadly to include any agreement, understanding, scheme, transaction, or series of transactions, whether or not legally enforceable. A 'tax advantage' takes its meaning from section 1139 of the Corporation Tax Act 2010, covering reliefs, deductions, repayments, or the avoidance or reduction of a charge to tax.

Corporation Tax Act 2010 section 291B

Tariff receipts: counteraction of avoidance arrangements

Section 291B provides an anti-avoidance rule that allows HMRC to counteract any tax advantage obtained through arrangements designed to exploit the tariff receipts rules in section 291, which deals with how certain oil-related tariff income is taxed.

Where an arrangement has been entered into with a main purpose of obtaining a tax advantage by reference to the tariff receipts rules in section 291, that tax advantage must be counteracted by making just and reasonable adjustments.
Counteraction adjustments may be made by way of an assessment, modification of an assessment, amendment or disallowance of a claim, or by any other suitable means, and may be carried out by HMRC or otherwise.
The term "arrangement" is defined very broadly to include any agreement, understanding, scheme, transaction, or series of transactions, whether or not they are legally enforceable.
A "tax advantage" takes its meaning from section 1139 of the Corporation Tax Act 2010, which covers reliefs, deductions, repayments, or the avoidance or reduction of a charge to tax.

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