»Ê¹ÚÌåÓýapp

This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.

»Ê¹ÚÌåÓýapp type of schemes that will be caught by the anti-avoidance rules dealing with the main rules of TIOPA10/PT7

TIOPA10/S307 to S310 contain the anti-avoidance rules that are intended to prevent manipulation of the rules within Chapters 3 and 4. In direct terms this means the anti-avoidance rules are intended to prevent manipulation of the calculation of

• the available amount;
• the tested expense amount; and
• the tested income amount.

However sections 307 to 310 also deal with schemes that indirectly lead to manipulation of these amounts, such as a scheme that looks to manipulate the make-up of a group.

»Ê¹ÚÌåÓýapp types of scheme that are likely to be caught by the anti-avoidance rules are:

• Schemes involving a temporary restructuring of the group in order to put a cash-rich company into the UK, and hence to create net financing income and increase the tested income amount..
• Schemes involving external borrowing, where although there is a commercial purpose for the borrowing, the scheme involves additional transactions which mean more is borrowed than is necessary, with the balance being put on deposit. For example a group needs to borrow $300 million for an acquisition, but the scheme entered into by members of the group involves a borrowing of $500 million and an investment of $200 million that effectively represents a deposit of surplus cash. »Ê¹ÚÌåÓýapp available amount is increased by the finance expense payable on the additional $200 million debt.
• Schemes involving back to back arrangements. For example one overseas group company borrows â‚�1 billion, invests the money in another overseas group company which places the money on deposit with the same bank. »Ê¹ÚÌåÓýapp difference between the rate for borrowing and the deposit rate is 25 basis points, which represents the bank’s fee for providing the back to back arrangement. »Ê¹ÚÌåÓýapp scheme increases the available amount for a period of account of the worldwide group by the amount of interest payable on â‚�1 billion borrowing.
• Schemes where the form of the scheme means there is an amount that would be included as a relevant liability, but the substance of the scheme means there is no actual borrowing.