Taxation (International and Other Provisions) Act 2010 Schedule 7 Part 9

Relocation of section 787 of ICTA (paragraphs 48–52)

Schedule 7 Part 9 relocates an anti-avoidance rule (formerly section 787 of ICTA) into the Income Tax Act 2007 as new section 809ZG, denying income tax relief for interest payments where the main purpose of the underlying transaction is to obtain a tax advantage.

• Income tax relief for interest payments is denied where a scheme or arrangement has been put in place and the sole or main benefit of the transaction is a reduction in tax liability.
• The denial applies regardless of whether the scheme or arrangement was set up before or after the transaction giving rise to the interest payment.
• "Relief" covers both deductions in calculating profits or gains and deductions or set-offs against income.
• The rule was previously section 787 of ICTA (originally section 38 of the Finance Act 1976) and has been relocated into Part 13 of ITA 2007 (tax avoidance) for ease of reference, mirroring the equivalent corporation tax provision in section 443 of CTA 2009.