Taxation of Chargeable Gains Act 1992 section 151M

Profit share agency arrangements

Section 151M defines the conditions under which a profit share agency arrangement qualifies as an alternative finance arrangement for capital gains tax purposes.

• A principal appoints an agent (one or both must be a financial institution) and provides money for the agent to invest with a view to producing a profit
• The principal is entitled to a specified share of the profits, while the agent keeps any additional profits and may also receive a fee from the principal
• The payments to the principal must, in substance, equate to the return on a conventional interest-bearing investment
• The arrangement is excluded from this treatment if it is not conducted on arm's-length terms, as provided by section 151O