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FA 2015: Diverted profits tax - a detailed guide to the rules

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The diverted profits tax is a new tax enacted as part of FA 2015. It seeks to target profits which have been ‘diverted’ from the UK tax net, either by the involvement of entities or transactions lacking economic substance, or through an ‘avoided PE’. Taxable ‘diverted profits’ are assessed by HMRC issuing a charging notice, as opposed to under self-assessment, and are subject to tax at 25% (or 55% in the case of ring fence profits). The legislation is complex and its interaction with the UK’s DTTs and EU law obligations, as well as the BEPS programme, is unclear.

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