What is a UK tax advantage under section 234 of TIOPA 2010?

Under section 234 of TIOPA 2010, a UK tax advantage includes relief from corporation tax, a repayment of corporation tax, avoidance or reduction of a corporation tax charge, avoidance of a corporation tax assessment, obtaining a tax credit as defined in the Corporation Tax Act 2010, deferral of a charge, or advancement of a repayment.

Does deferring a corporation tax charge count as a UK tax advantage?

Yes, section 234 treats timing advantages as a UK tax advantage. If a scheme defers a corporation tax charge to a later date or brings forward a corporation tax repayment to an earlier date, it counts as achieving a UK tax advantage, even if the total amount of tax ultimately paid or repaid remains the same.

How does section 234 relate to transfer pricing anti-avoidance rules?

Section 234 provides a key definition used to determine whether certain transfer pricing and anti-avoidance provisions apply. If a scheme achieves a UK tax advantage for a company, such as reducing corporation tax through arrangements with connected parties, it may trigger further examination of whether the arrangement reflects arm's length terms.

Are tax credits included in the definition of UK tax advantage?

Yes, obtaining a tax credit for a company is included in the definition of a UK tax advantage under section 234. The term 'tax credit' carries the meaning given by the Corporation Tax Act 2010, ensuring that benefits received as credits rather than simple liability reductions are also caught by the provision.

Taxation (International and Other Provisions) Act 2010 section 234

Schemes achieving UK tax advantage for a company

Section 234 defines what it means for a scheme to achieve a UK tax advantage for a company, setting out the specific types of tax benefit that count as a "UK tax advantage" for the purposes of the transfer pricing rules.

A scheme achieves a UK tax advantage for a company if it results in relief from corporation tax, a repayment of corporation tax, the avoidance or reduction of a charge to corporation tax, or the avoidance of an assessment to corporation tax
A UK tax advantage also arises where a scheme secures a tax credit for a company, as defined in the relevant provisions of the Corporation Tax Act 2010
The definition also covers situations where a deferral of a corporation tax charge or an advancement of a corporation tax repayment is achieved through the scheme
The concept of "UK tax advantage" is relevant to determining whether certain transfer pricing and anti-avoidance provisions apply to arrangements involving companies

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