Income Tax Act 2007 section 517K

Arrangements for avoiding tax

Section 517K is an anti-avoidance provision that allows HMRC to counteract tax advantages obtained through arrangements whose main purpose (or one of the main purposes) is to avoid income tax on profits treated as trading profits from disposals concerned with land in the United Kingdom.

• Where an arrangement has been entered into with a main purpose of obtaining a relevant tax advantage, that advantage must be counteracted by means of adjustments
• A relevant tax advantage means an advantage relating to income tax charged on amounts treated as trading profits under the transactions in land rules in this Part of the Act
• Adjustments can be made by HMRC or by the taxpayer, and may take the form of assessments, modifications to assessments, amendments or disallowances of claims, or other means
• The provision also catches advantages obtained through double taxation agreements, but only where the advantage is contrary to the object and purpose of those agreements