Corporation Tax Act 2010 section 938P

Meaning of "tax mismatch scheme"

Section 938P defines what constitutes a "tax mismatch scheme" by setting out two alternative conditions, either of which will bring a scheme within the rules.

• A scheme is a tax mismatch scheme if there is no practical likelihood it will fail to deliver a relevant tax advantage of £2 million or more (Condition A), or if one of the main purposes of entering into it is to obtain the chance of a relevant tax advantage and the expected value of the scheme is not negative (Condition B).
• The £2 million threshold in Condition A may be increased by Treasury order, applying only to schemes entered into on or after the date the order takes effect.
• Both conditions are assessed at the time the scheme is entered into, on the assumption that all parties will carry the scheme out, and if the scheme's duration is uncertain, the conditions are tested against any reasonable assumption about that duration.
• When determining whether either condition is met, any profits or losses that would arise from the operation of the tax mismatch scheme rules themselves (under section 938O) are ignored.