SCHEDULES
SCHEDULE 4Avoidance involving profit fragmentation arrangements
2Profit fragmentation arrangements
1
Arrangements are “profit fragmentation arrangements” if—
a
provision has been made or imposed as between the resident party and the overseas party by means of the arrangements (“the material provision”),
b
as a result of the material provision, value is transferred from the resident party to the overseas party which derives directly or indirectly from the profits of a business chargeable to income tax or corporation tax (see paragraph 3),
c
the value transferred is greater than it would have been if it had resulted from provision made or imposed as between independent parties acting at arm’s length, and
d
any of the enjoyment conditions are met in relation to a related individual (see paragraph 4).
2
But arrangements are not “profit fragmentation arrangements” if—
a
b
it is not reasonable to conclude that the main purpose, or one of the main purposes, for which the arrangements were entered into was to obtain a tax advantage.
3
For the purposes of sub-paragraph (1)(a) provision made or imposed as between a partnership of which the resident party is a member and the overseas party is to be regarded as provision made or imposed as between the resident party and the overseas party.