Diverted profits tax ― overview

Produced by Tolley in association with

Corporation Tax

Guidance

Background

The diverted profits tax (DPT) was introduced by Finance Act 2015, ss 77–116 and Sch 16. The aim of the DPT is to deter multinational groups of companies from implementing aggressive tax planning techniques which divert profits away from the UK in an attempt to minimise the group’s overall corporation tax bill. The DPT legislation applies to accounting periods beginning on or after 1 April 2015. There are apportionment rules for accounting periods that straddled that date.

HMRC guidance on the DPT can be found at INTM489500 onwards.

This guidance note helps readers to understand the basic principles of the DPT regime to enable them to ascertain whether a particular scenario is likely to attract a charge to DPT, with links to additional sources of information as appropriate. These include articles from Taxation and Tax Journal relating to DPT. For additional expert commentary on DPT, see also ‘Introduction to Diverted Profits Tax ― update’, by Paul Bowes, Tolley’s Tax Digest, May 2019 ― TTD, Issue 199[1.1]

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Paul Bowes

International Tax Consultant at Paul R Bowes

Paul Bowes is an independent tax consultant who principally advises on corporate structuring and the taxation of foreign profits, having previously worked in practice with leading accounting firms and within the banking sector. He has actively participated in the various consultations relating to the reform of company taxation that have taken place in the UK in the last decade or so, including the reform of the controlled foreign companies' rules.

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