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Where the DPT charge may arise under the avoided PE rule (see D2.717)¹ there are exemptions which mean that the charge will not arise if:

1. Ìý

   (a)ÌýÌýÌýÌý both the avoided PE and the foreign company (or the foreign company and another person that has arrangements with the foreign company) are small or medium-sized enterprises (as defined at D2.708) and the tax avoidance condition (D2.717) is not met under the avoided PE DPT rule²

2. Ìý

   (b)ÌýÌýÌýÌý the avoided PE is 'excepted', in other words:

3. 1. Ìý

      (1)ÌýÌýÌýÌý its activity is such that the foreign company would not be treated as carrying on a trade in the UK through a permanent establishment as a result of the activity because of either the exclusion for agents of independent status (D4.123)³ or that for alternative finance arrangements (B5.602B)⁴; and

   2. Ìý

      (2)ÌýÌýÌýÌý where the avoided PE is not an agent of independent status only because of the rules for brokers, investment managers and members' or managing