CTM07525 - Corporation Tax: tax avoidance involving carried-forward losses: identifying the tax arrangements

Whether the conditions are met is judged by reference to 鈥榯he tax arrangements鈥�, and identifying the scope of what constitutes the extent of the tax arrangements will be a key consideration.

For example, it will be necessary to consider:

  • Whether or not a profit arises as a consequence of the arrangements or for another reason,
  • Whether or not a deduction arises in an accounting period as a consequence of the arrangements or for another reason,
  • Whether the arrangements include transactions or steps inserted purely for the purposes of accessing carried-forward losses and creating a new deduction, and
  • Whether or not to include non-tax value arising from wider arrangements.

Too narrow or too broad a scope could lead to an incorrect amount of value being attributed to either or the tax or non-tax values.

The scope of what is included in the tax arrangements must be judged on a case-by-case basis, and will likely involve fact finding discussions and/or correspondence between HMRC and the customer.