Taxation (International and Other Provisions) Act 2010 section 87

Schemes that would reduce a person's tax liability

Section 87 identifies schemes or arrangements that have the effect of reducing the total UK tax liability of a person (and their connected persons) who claims, or is able to claim, a credit for foreign tax under a double taxation agreement.

• The section targets schemes where the total UK tax actually payable by a person and their connected persons is less than it would be if the scheme's transactions were ignored
• The comparison is between actual UK tax payable (Amount A) and the UK tax that would be payable without the scheme (Amount B) — if A is less than B, the scheme is caught
• UK tax for these purposes means income tax, corporation tax, and capital gains tax, and the comparison covers all income and chargeable gains arising in the relevant chargeable period
• Whether someone is a connected person is determined in accordance with section 1122 of the Corporation Tax Act 2010, and for capital gains tax purposes the chargeable period means the tax year