ICTA88/S748(3)(b) and ICTA88/SCH25/PARA19

The diversion of profits leg of the motive test deals with controlled foreign companies which are used to reduce United Kingdom tax but which may not undertake transactions which achieve a reduction in UK tax as defined by ICTA88/SCH25/PARA17. For example, the only transaction which a moneybox company might undertake in an accounting period is to deposit its funds at interest in a bank account. The only transactions it might be involved with might be:

the subscription of shares in it by the UK parent; and

the deposit of the funds from the subscription at interest in an offshore bank account.

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