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For the TIOPA 2010 anti-avoidance rules to apply, there must be a scheme or arrangement. This is condition C¹.

The third of the triggering conditions (Condition C) described in E6.437 above is that the scheme or arrangement falls within a statutory definition. That definition² differs depending upon whether or not the scheme is an 'underlying-tax scheme'. An underlying-tax scheme is, a scheme or arrangement the main purpose, or one of the main purposes, of which is to cause an amount of underlying tax relating to a dividend paid by an overseas resident body corporate to be taken into account³.

Where there is no underlying-tax scheme, the legislation will apply to foreign income that is taxed directly both in the UK and overseas, eg profits earned in a foreign jurisdiction in respect of a permanent establishment located there, or certain payments, including dividends, interest, royalties and rent, which are subject to foreign tax.

A scheme or arrangement falls within the avoidance net, if it is not an underlying-tax scheme,