U.K. - More Details on Diverted Profits Tax | KPMG | CA
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U.K. - More Details on Diverted Profits Tax

U.K. - More Details on Diverted Profits Tax

The U.K. recently released updated guidance on its new 25% diverted profits tax.


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The U.K. recently released updated guidance on its new 25% diverted profits tax. This guidance updates and replaces a 2014 version and acts as an interim draft that the U.K. said it will review and update continuously.


The new 25% diverted profits tax, effective April 1, 2015, is separate from corporation tax and is aimed at multinationals entering into "contrived arrangements" to divert profits from the U.K. This tax will affect non-U.K. resident groups that make sales of more than £10 million (approximately US$14.8 million) to U.K. customers and companies that achieve an effective tax rate benefit through payments to group companies.

Changes to the diverted profits tax legislation

The updated guidance reflects various changes to the U.K.'s diverted profits tax legislation, including:

  • Clearer calculation rules
  • Rules on how the diverted profits tax applies to partnerships
  • An amended excepted loan relationship rule.

The guidance features:

  • New examples on applying the diverted profits tax to property development companies, oil and gas companies, insurance companies and banking groups
  • A new chapter on customer engagement with the U.K. tax authorities, describing interaction between the U.K. and taxpayers, when the U.K. diverted profits tax team is to be consulted, and the interaction of the diverted profits tax and advance pricing agreements (APAs)
  • A new chapter on procedures for raising a diverted profits tax charge
  • A notification template.

The U.K. also said there will be no formal statutory or non-statutory clearance procedure available for the diverted profits tax, but taxpayers may request a written opinion from the U.K. tax authority on the likelihood of it issuing a notice for the tax.

For more information, contact your KPMG adviser.


Information is current to April 21, 2015. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

For more information, contact KPMG's National Tax Centre at 416.777.8500.

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