Taxation (International and Other Provisions) Act 2010 section 371QG

Anti-avoidance

Section 371QG provides a targeted anti-avoidance rule that overrides the normal method of apportioning a controlled foreign company's chargeable profits and creditable tax when arrangements have been entered into to gain a tax advantage.

• The rule applies where an arrangement has been entered into and the main purpose, or one of the main purposes, is to obtain a tax advantage for any person by avoiding or reducing a CFC charge
• The tax advantage in question is the avoidance or reduction of a charge or assessment under the CFC rules for the relevant accounting period or any other accounting period of the CFC
• Where the rule applies, the CFC's chargeable profits and creditable tax must be apportioned on a just and reasonable basis, rather than using the standard mechanical apportionment rules that would otherwise apply
• The just and reasonable apportionment must, so far as practicable, counteract the effects of the arrangement to the extent those effects relate to obtaining the tax advantage