What is the purpose of section 357YH of the Corporation Tax Act 2010?

Section 357YH provides HMRC with an anti-avoidance rule to counteract any tax advantages arising from avoidance arrangements connected with the restitution interest provisions in Part 8C. It ensures companies cannot use contrived arrangements to reduce or eliminate the corporation tax otherwise due on restitution interest amounts received.

How does HMRC counteract avoidance arrangements under section 357YH?

HMRC counteracts avoidance arrangements by making just and reasonable adjustments to amounts brought into account under Part 8C. Adjustments can take the form of a new assessment, modification to an existing assessment, amendment to a return, or any other suitable mechanism. Adjustments must be fair and proportionate in the circumstances.

Where are the definitions of relevant avoidance arrangements and tax advantage found?

The definitions of 'relevant avoidance arrangements' and 'tax advantage' are not contained in section 357YH itself but are set out separately in section 357YI of the Corporation Tax Act 2010. These definitions determine the scope of the anti-avoidance rule by establishing which arrangements and benefits are caught.

Can a company make its own adjustments under section 357YH?

Yes. While HMRC officers can make adjustments directly, section 357YH also allows for adjustments to be made by the company itself. For example, a company may amend its own tax return to remove the effect of avoidance arrangements, thereby restoring the full amount of restitution interest to be brought into account.

Corporation Tax Act 2010 section 357YH

Countering effect of avoidance arrangements

Section 357YH provides an anti-avoidance rule that allows HMRC to counteract any tax advantages arising from avoidance arrangements connected with the restitution interest provisions in Part 8C of the Corporation Tax Act 2010.

Any tax advantages gained through relevant avoidance arrangements must be counteracted by making just and reasonable adjustments to amounts brought into account under Part 8C.
Adjustments can be made by way of an assessment, modification of an assessment, amendment, or any other appropriate method.
Adjustments may be made by an officer of HMRC or by other means as required.
The definitions of "relevant avoidance arrangements" and "tax advantage" are set out separately in section 357YI.

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