Income Tax (Trading and Other Income) Act 2005 section 765

Anti-avoidance

Section 765 prevents an exemption from income tax being granted where the purpose, or one of the main purposes, of a payment arrangement is the avoidance of tax.

• If a payment arrangement has tax avoidance as its purpose or one of its main purposes, no tax exemption will be available.
• This anti-avoidance rule overrides any exemption that might otherwise apply to the payment in question.
• The wording of this provision is modelled on similar anti-avoidance clauses commonly found in double taxation treaties between countries.
• The provision was amended by Finance Act 2021, section 34(1)(a), reinforcing HMRC's ability to deny exemptions where avoidance motives are present.