(1)A scheme is a deduction scheme if a party to a transaction forming part of the scheme meets conditions A and B.
(2)Condition A is that the party is regarded as being a person under the tax law of any territory.
(3)Condition B is that the party’s profits or gains are treated, for the purposes of a relevant tax imposed under the law of any territory, as the profits or gains of a person or persons other than the person mentioned in condition A.
(4)Condition B is not met just because the party’s profits or gains are subject to a rule that—
(a)is similar to that in section 747(3) of ICTA (imputation of chargeable profits of controlled foreign company), and
(b)has effect under the tax law of any territory outside the United Kingdom.
(5)For the purposes of this section, the following are relevant taxes—
(a)income tax,
(b)corporation tax, and
(c)any tax of a similar character to income tax or corporation tax that is imposed by the law of a territory outside the United Kingdom.