Commentary

D1.8116 Disguised distribution arrangements involving derivative contracts

Corporate tax
Corporate tax | Commentary

D1.8116 Disguised distribution arrangements involving derivative contracts

Corporate tax | Commentary

D1.8116 Disguised distribution arrangements involving derivative contracts

An anti-avoidance provision applies for accounting periods beginning on or after 5 December 20131 to counter arrangements that seek to strip taxable profits from a company using a derivative contract. The example HMRC had seen, which led to the introduction of this measure, was a total return swap which was used to extract the taxable profits from a company2. The measure applies where:

  1.  

    (a)     a company (A) is a party to arrangements3 involving one or more derivative contracts (each a specified contract);

  2.  

    (b)     another company (B) is also a party to the arrangements

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