INTM610110 - Enjoyment Conditions

Paragraph 2(1)(d) Schedule 4 Finance Act 2019 says that for arrangements to be Profit Fragmentation Arrangements one of the enjoyment conditions must be met in relation to the related individual. Paragraph 4 Schedule 4 Finance Act 2019 sets out the enjoyment conditions in more detail.

For these conditions to be satisfied it must be reasonable to conclude that some or all of the value transferred as a result of the material provision is related to something done by the related individual, or is result of some property or purported right of the individual. I.e. the Profit Fragmentation legislation, which focuses on the business profits chargeable to income tax or corporation tax, requires the transfer of value to be connected to the element of that business relating to the related individual.

Furthermore one of the following tests must be satisfied – either:

• the related individual is able to enjoy the benefit of the value transferred to the overseas entity (the enjoyment test), or
• the related individual has procured the transfer of value (the procurer test).

The enjoyment test and the procurer test are considered further at INTM610120 and INTM610130.