Profit fragmentation

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Profit fragmentation
  • What are profit fragmentation arrangements?
  • Who is likely to be affected by the rules?

From 1 April 2019 (6 April 2019 for income tax purposes), targeted anti-avoidance legislation tackles arrangements that involve fragmentation of business profits. The aim of these rules is to ensure that the full amount of profit that should be taxable in the UK is so taxed.

FA 2019, Sch 4

The rules counteract the arrangements by bringing amounts back into charge to UK tax, either by disallowing expenses or by reattributing receipts to the UK business. The targeted avoidance typically involves some or all of the profits of a UK business being diverted to an offshore entity which pays little or no tax.

FA 2019, Sch 4, para 7

For HMRC guidance, see INTM61000  onwards. For further detailed commentary, see Simon’s Taxes B2.715 (subscription sensitive).

What are profit fragmentation arrangements?


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