BIM60605 - Profits from a trade of dealing in or developing UK land: Anti-fragmentation: Fragmented activities rules

The fragmented activities rules apply where all of the following conditions are met:

  • A company (바카라 사이트˜C바카라 사이트™) or a person chargeable to income tax (바카라 사이트˜P바카라 사이트™) disposes of land in the UK,
  • Any of conditions A to D in S356OB CTA 2010 or S517B ITA 2007 are met in relation to that land, and
  • A person (바카라 사이트˜R바카라 사이트™) who is associated with C/P at a relevant time has made a relevant contribution to:
    • The development of land.
    • Any other activities directed towards realising a profit or gain from the disposal of the land.

Where the fragmented activities rules apply, C/P and R will be considered as though they were the same person. This means, any profit or gain realised by C/P will be calculated as if C/P and R were one.

The fragmentation rules will apply when C realises a profit or gain on the disposal of land. This means that C/P would be taxed on R바카라 사이트™s contributions at this point. If any of those contributions have already been taxed in the UK, HMRC would not look to tax them again.

Only profits of R that are directly attributable to C/P are taxed in that entity, while R바카라 사이트™s other [unrelated] profits remain taxable in R.

Where any amount is paid by R to C/P for the purpose of meeting or reimbursing the cost of corporation tax or income tax which C/P is liable to pay as a result of this rule:

  • The amount will not be taken into account in calculating profits or losses of R or C/P for the purposes of income tax or corporation tax; and
  • Will not for any purpose of the Corporation Tax Acts be regarded as a distribution.