INTM610060 - Profit Fragmentation Arrangements

Paragraph 2 Schedule 4 Finance Act 2019 defines the “Profit Fragmentation Arrangements” to which the rules apply.

For there to be “Profit Fragmentation Arrangements” four conditions must be satisfied:

• There exists a Material Provision (as defined in the legislation)
• There is a Transfer of Value as a result of that provision
• The value of the transfer is not the same as would result in an Arm’s Length Transfer between independent parties
• One of the Enjoyment Conditions is met in relation to the related individual

These conditions are discussed in more detail in the following pages.

The arrangements will not be “Profit Fragmentation Arrangements” if either of the Exception Conditions discussed at INTM610140 is met.