SCHEDULES
SCHEDULE 4Avoidance involving profit fragmentation arrangements
1Introduction and overview
1
This Schedule contains provision about countering the tax effects of certain arrangements (“profit fragmentation arrangements”).
2
Profit fragmentation arrangements involve the following parties—
a
a person resident in the United Kingdom (“the resident party”),
b
an overseas person or entity (“the overseas party”) who is not resident in the United Kingdom, and
c
an individual (a “related individual”) who is—
i
the resident party,
ii
a member of a partnership of which the resident party is a partner, or
iii
a participator in a company which is the resident party.
3
An “overseas person or entity” means—
a
a person abroad within the meaning given by section 718 of ITA 2007, or
b
a company, partnership, trust or other entity or arrangements established or having effect under the law of a country or territory outside the United Kingdom (regardless of whether it has legal personality as a body corporate).
4
5
Paragraph 7 deals with the adjustments which must be made to counteract the effects of such arrangements.
6
Other provisions of this Schedule—