Corporation Tax Act 2010 section 938B

Meaning of "a group mismatch scheme" and "the scheme group"

Section 938B defines what constitutes a "group mismatch scheme" and identifies the "scheme group", establishing two alternative conditions under which a tax arrangement involving group members will be caught by these provisions.

• A scheme is a group mismatch scheme if its parties include members of the same group and either Condition A (practical certainty of a tax advantage of £2 million or more) or Condition B (a main purpose of obtaining a tax advantage, with a positive expected value) is met.
• Both conditions are assessed at the time the scheme is entered into, based on what is expected at the outset rather than what actually happens — so a scheme that never produces a tax advantage may still be caught, and one that does produce an advantage may not be.
• Under Condition B, the expected value of the scheme must be calculated by weighing up the probability and size of every possible tax advantage and disadvantage the scheme could produce in different scenarios.
• The Treasury may increase the £2 million threshold by order, and where the duration of a scheme is uncertain, the conditions are treated as met if they would be satisfied on any reasonable assumption about how long the scheme lasts.