Taxation (International and Other Provisions) Act 2010 section 68

Meaning of "avoidance scheme" in section 67

Section 68 defines what constitutes an "avoidance scheme" for the purposes of the restriction on double taxation relief where the underlying foreign tax rate exceeds the UK corporation tax rate.

• An avoidance scheme is any scheme or arrangement (written or unwritten) that meets all three conditions: its purpose includes obtaining underlying tax credit relief, the parties include the claimant company or persons related or connected to it, and the parties also include a person not previously under the claimant company's control.
• The parties to the scheme must include the claimant company itself, a company related to it (meaning the claimant controls at least 10% of voting power in that company, either directly or through a parent), or a person connected with it under the standard connected persons rules.
• The scheme must also involve a person who was not under the claimant company's control at any time before the scheme was entered into or carried out — this is designed to catch arrangements involving independent third parties brought in to facilitate the avoidance.
• Control for these purposes is determined broadly: it covers control as defined in the close companies rules, extends those rules to partnerships and unincorporated associations, and also catches anyone who acted under the claimant company's direction in relation to the scheme.

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