Clifford Chance

The Diverted Profits Tax: its impact on ordinary commercial transactions

4 February 2015

Clifford Chance paper

On 10 December 2014, the Government published draft legislation enacting a "diverted profits tax" (see our client briefing).

The stated objective of the DPT is to tax "artificial and contrived structures" which avoid UK tax. However, the way the DPT legislation has been framed means that its scope is much wider than this objective.

We have analysed the effect of the DPT on straightforward commercial transactions involving financial institutions, corporates and investment funds. In many cases these transactions give rise to DPT liability and/or a notification requirement. We believe this is unintended by HMRC and HM Treasury. Our paper proposes changes to the draft legislation to remove unnecessary uncertainty and risk for business, and has been sent to HMRC as part of the DPT consultation process.

We are making a copy of the paper available here for our clients and other interested parties.

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