Corporation Tax Act 2010 section 779A

Application of Chapter

Section 779A sets out the conditions under which the anti-avoidance rules in Chapter 4 apply to disposals of assets made by or through partnerships where a company within the charge to corporation tax is involved.

• The chapter targets arrangements where a company (the transferor) disposes of an asset to another person (the transferee) by routing the disposal through a partnership, and a main purpose of any step in the disposal is to obtain a tax advantage for any person.
• The transferor and transferee (or persons connected with them) must each be members, at any time, of the relevant partnership or of a partnership associated with it — they do not need to be members at the same time, and chains of partnerships cannot be used to circumvent the rules.
• The rules only bite where it is reasonable to assume that, had the asset been disposed of directly between the parties, the consideration (or the market value if no or inadequate consideration is given) would have been taxable as income of the transferor for corporation tax purposes.
• "Arrangements" is defined very broadly to include any agreement, understanding, scheme, transaction or series of transactions whether or not legally enforceable, and "tax advantage" is limited to advantages in relation to income tax or the corporation tax charge on income.