INTM595520 - Arbitrage: legislation and principles - receipts: five conditions need to be met for the receipts rule to apply

»Ê¹ÚÌåÓýappre are five conditions that will need to be satisfied before the legislation can have effect in respect of receipts. »Ê¹ÚÌåÓýapp essential points to note are that:

  • the company has entered into a scheme;
  • the scheme provides for the company to receive an amount on which it is not liable to UK tax;
  • that amount may be deducted from or allowed against taxable income of the person making the payment;
  • the arbitrage - in this case a mismatch in tax treatment - is a reasonable expectation of the parties to the scheme; and
  • the payment constitutes a contribution to the capital of the company.