Corporation Tax Act 2010 section 357YM

Assignment of rights to person not chargeable to corporation tax

Section 357YM is an anti-avoidance rule that prevents a company from escaping the corporation tax charge on restitution interest by transferring the right to receive that interest to a person or entity outside the scope of corporation tax.

• Where a chargeable company transfers a restitution claim right (on or after 21 October 2015) to an individual or a non-qualifying company, and one of the main purposes is to secure a tax advantage, restitution interest arising from that transfer is taxed as if it still belongs to the transferor
• A "chargeable company" is one that is either UK resident or trades in the UK through a permanent establishment, is not a charity, and would not be exempt from corporation tax on restitution interest
• A "non-qualifying company" is one that is non-UK resident, is a charity, or would be exempt from corporation tax on restitution interest
• The rule applies whether the rights are transferred directly to the non-qualifying recipient or reach that recipient through a chain of further transfers