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The Finance Bill rules on profit fragmentation

Substantial changes have been made to the profit fragmentation anti-avoidance since the original consultation was published, writes Mark Saunders (PwC).

The new legislation on profit fragmentation contained in Finance Bill 2019 cl 16 and Sch 4 is aimed at arrangements where either some or all of the profits of a UK business are moved to an offshore entity where little or no tax is paid or where excessive expenses are paid by the UK business. One of the examples that is a particular target of the legislation is where an offshore entity is owned by a trust that the government believes enables someone linked with the UK business to benefit from the income which escapes UK taxation.
 
So while the new rules are not targeted at normal UK businesses the breadth of the legislation means that...

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