CFM77720 - Other tax rules on corporate debt: tax mismatch schemes: outline of the legislation
»Ê¹ÚÌåÓýapp Tax Mismatch Scheme (TMS) rules apply to any company within the charge to corporation tax that is a party to a scheme, where at least one of two conditions (condition A or condition B) is met. »Ê¹ÚÌåÓýappse conditions are either that:
- it is practically certain that the scheme will secure a relevant tax advantage, or
- the purpose of the company is to secure a relevant tax advantage.
Where the rules apply to a company, the TMS rules prevent a scheme profit or loss being brought to account as a credit or debit for the purposes of the loan relationship or derivative contracts rules. A scheme profit or loss is one that arises from the scheme and meets either or both of the asymmetry conditions.
»Ê¹ÚÌåÓýapp TMS rules require the economic profits or losses of the scheme participants to be calculated taking into account profits and losses made as a result of the provisions of the Corporation Tax Acts, and assuming that the company has tax capacity to benefit from scheme losses.
»Ê¹ÚÌåÓýapp terms used in, and the application of, the legislation are explained in more detail as follows:
| CFM77730 to CFM77740 | explain the two conditions, condition A and condition B, one of which must be met for the legislation to apply |
|---|---|
| CFM77750 | explains the terms used in the legislation - ‘scheme�, ‘scheme profit or loss� |
| CFM77760 to CFM77770 | explain the asymmetry conditions |
| CFM77780 | explains the meaning of ‘relevant tax advantage� |
| CFM77790 | explains the meaning of ‘scheme period� |
| CFM77800 | explains the meaning of ‘economic profit or loss� |
| CFM77810 | explains the meaning of ‘tax capacity� |
| CFM77820 | sets out priority rules |