Commentary on Sections Structure of Chapters Overview Section 561: The return from one or more disposals
2193.In order to ascertain whether there is a guaranteed return for the purposes of this Chapter, section 559 (when disposals involve guaranteed returns) requires a consideration of “the return from one or more disposals”. This section explains what is meant by “the return from one or more disposals”. It is based on paragraph 5 of Schedule 5AA to ICTA.
2194.Subsection (1) contains the basic rule. The charge under section 555 (charge to tax under Chapter 12) is on a profit or gain from an individual disposal. But, in deciding whether there is a guaranteed return, more than one disposal in the scheme or arrangement can be taken into account and the overall result of that disposal or those disposals considered, that is to say the profits or gains less losses on those disposals or on all but an insignificant part of them.
2195.Subsection (2) provides that profits or gains or losses are to be treated as made by the same person, notwithstanding that they are realised by different persons, if they are made by persons who are associated with each other.
2196.Subsections (3) to (6) explain when persons are associated with each other. (This is quite unconnected with the associated person test in section 227 of ICTA.) All disposals must be part of the same scheme or arrangements (defined in subsection (7)) and all must share in the net return of all the profits and losses incurred on those disposals in a sharing arrangement agreed for that scheme or arrangements.
2197.The references in paragraph 5(3) of Schedule 5AA to ICTA to “associated companies” have not been reproduced. See Change 102 in Annex 1.