Taxation (International and Other Provisions) Act 2010 section 233

The deduction scheme conditions

Section 233 specifies the four conditions (A to D) that must be met for a scheme to qualify as a "deduction scheme" under the rules governing manufactured payments and repos.

• Condition A requires that the arrangement is one under which a person receives a manufactured payment that represents a dividend or interest on UK securities.
• Condition B requires that the manufactured payment gives rise to a deduction that can be used to reduce the payer's taxable income or profits.
• Condition C requires that the payer and the recipient are connected in a relevant way, or that the arrangement forms part of a wider set of transactions designed to secure a tax advantage.
• Condition D requires that the main purpose, or one of the main purposes, of the scheme is to obtain a tax advantage by means of the deduction.