Change 1 Article Choose an article Title and introductory text A1 Overview of the Corporation Tax Acts 1 Overview of Act 2 Charge to corporation tax 3 Exclusion of charge to income tax 4 Exclusion of charge to capital gains tax 5 Territorial scope of charge 5A Arrangements for avoiding tax 5B Trade of dealing in or developing UK land 6 Profits accruing in fiduciary or representative capacity 7 Profits accruing under trusts 8 How tax is charged and assessed 9 Beginning of accounting period 10 End of accounting period 11 Companies with more than one accounting date 12 Companies being wound up 13 Overview of Chapter 14 Companies incorporated in the United Kingdom 15 Continuation of residence established under common law 16 SEs which transfer registered office to the United Kingdom 17 SCEs which transfer registered office to the United Kingdom 18 Companies treated as non-UK resident under double taxation arrangements 18A Exemption for profits or losses of foreign permanent establishments 18B Chargeable gains etc 18C Capital allowances etc 18CA Income arising from immovable property 18CB Profits and losses from investment business 18D Payments subject to deduction 18E Employee share acquisitions 18F Effect of election 18G Anti-diversion rule 18H What are “diverted profits”? 18HA Modification of Chapter 3 of Part 9A of TIOPA 2010 18HB Modification of Chapter 4 of Part 9A of TIOPA 2010 18HC Modification of Chapter 5 of Part 9A of TIOPA 2010 18HD Modification of Chapter 7 of Part 9A of TIOPA 2010 18HE Modification of Chapter 9 of Part 9A of TIOPA 2010 18I Exemptions from anti-diversion rule 18IA The excluded territories exemption 18IB The low profits exemption 18IC The low profit margin exemption 18ID The tax exemption 18J Companies with total opening negative amount 18K Total opening negative amount: “matching” 18L Streaming 18M Streamed opening negative amounts: “matching” 18N Residual opening negative amount: “matching” 18O Transfers of foreign permanent establishment business 18P Exclusions 18Q Insurance companies 18R Meaning of “full treaty territory” 18S Other interpretation 19 Chargeable profits 20 Profits attributable to permanent establishment: introduction 21 The separate enterprise principle 22 Transactions treated as being on arm's length terms 23 Provision of goods or services for permanent establishment 24 Application to insurance companies 25 Non-UK resident banks: introduction 26 Transfer of financial assets 27 Loans: attribution of financial assets and profits arising 28 Borrowing: permanent establishment acting as agent or intermediary 29 Allowable deductions 30 Restriction on deductions: costs 31 Restriction on deductions: payments in respect of intangible assets 32 Restriction on deductions: interest or other financing costs 33 Trade includes office 34 Overview of Part 35 Charge to tax on trade profits 36 Farming and market gardening 37 Commercial occupation of woodlands 38 Commercial occupation of land other than woodlands 39 Profits of mines, quarries and other concerns 40 Credit unions 40A Payments to company directors 40B Professionals in practice: incidental income from an office or employment 41 Effect of company starting or ceasing to be within charge to corporation tax 42 Tied premises 43 Caravan sites where trade carried on 44 Surplus business accommodation 45 Payments for wayleaves 46 Generally accepted accounting practice 47 Losses calculated on same basis as profits 48 Receipts and expenses 49 Items treated as receipts and expenses 49A Money's worth 50 Animals kept for trade purposes 51 Relationship between rules prohibiting and allowing deductions 52 Apportionment etc of profits and losses to accounting period 53 Capital expenditure 54 Expenses not wholly and exclusively for trade and unconnected losses 55 Bad debts 56 Car ... hire 57 Car ... hire: supplementary 58 Hiring cars (but not motor cycles) with low CO2 emissions before 1 April 2013 58A Short-term hiring in and long-term hiring out 58B Connected persons: application of section 56 59 Patent royalties 60 Expenditure on integral features 60A Rental rebates 61 Pre-trading expenses 62 Tenants under taxed leases: introduction 63 Tenants occupying land for purposes of trade treated as incurring expenses 64 Limit on deductions if tenant entitled to mineral extraction allowance 65 Tenants dealing with land as property employed for purposes of trade 66 Restrictions on section 63 expenses: lease premium receipts 67 Restrictions on section 63 expenses: lease of part of premises 68 Replacement and alteration of trade tools 69 Payments for restrictive undertakings 70 Employees seconded to charities and educational establishments 71 Educational establishments 72 Payroll deduction schemes: contributions to agents' expenses 73 Counselling and other outplacement services 74 Retraining courses 75 Retraining courses: recovery of tax 76 Redundancy payments and approved contractual payments 77 Payments in respect of employment wholly in employer's trade 78 Payments in respect of employment in more than one capacity 79 Additional payments 80 Application of section 79 in cases involving partnerships 81 Payments made by the Government 82 Contributions to local enterprise organisations or urban regeneration companies 83 Meaning of “local enterprise organisation” 84 Approval of local enterprise agencies 85 Supplementary provisions with respect to approvals 86 Meaning of “urban regeneration company” 86A Contributions to flood and coastal erosion risk management projects 86B Interpretation of section 86A 87 Expenses of research and development 88 Payments to research associations, universities etc 89 Expenses connected with patents 90 Expenses connected with designs or trade marks 91 Payments to Export Credits Guarantee Department 92 Levies etc under FISMA 2000 92A Deductions in relation to salaried members 93 Capital receipts 94 Debts incurred and later released 95 Acquisition of trade: receipts from transferor's trade 96 Reverse premiums 97 Excluded cases 98 Tax treatment of reverse premiums 99 Arrangements not at arm's length 100 Connected persons and property arrangements 101 Distribution of assets of mutual concerns 102 Industrial development grants 103 Sums recovered under insurance policies etc 104 Repayments under FISMA 2000 105 Gifts of trading stock to charities etc 106 Meaning of “designated educational establishment” 107 Gifts of medical supplies and equipment 108 Receipt of benefits by donor or connected person 109 Election for application of herd basis rules 110 Meaning of “animal”, “herd”, “production herd” etc 111 Other interpretative provisions 112 Initial cost of herd and value of herd 113 Addition of animals to herd 114 Replacement of animals in herd 115 Amount of receipt if old animal slaughtered under disease control order 116 Sale of animals from herd 117 Sale of whole or substantial part of herd 118 Acquisition of new herd begun within 5 years of sale 119 Section 118: sale for reasons outside farmer's control 120 Replacement of part sold begun within 5 years of sale 121 Section 120: sale for reasons outside farmer's control 122 Herd basis elections 123 Five year gap in which no production herd kept 124 Slaughter under disease control order 125 Preventing abuse of the herd basis rules 126 Information if election made 127 Further assessment etc if herd basis rules apply 127A Application of Chapter 8A 127B Right to make claim 127C Book value 127D Effect of claim for spreading of profits 127E Adjustment: cessation of trading 127F Time limits etc for spreading claim 127G Interpretation 128 Taxation of amounts taken to reserves 129 Conversion etc of securities held as circulating capital 130 Insurers receiving distributions etc 130A Insurers in financial difficulties: write-down orders 131 Incidental costs of issuing qualifying shares 132 Dividends etc granted by registered societies 133 Annual payments paid by a credit union 133A Compensation payments: restriction of deductions 133B Companies affected by section 133A: amounts treated as received 133C The disclosure condition 133D Excluded expenses 133E Meaning of “banking company” 133F “Excluded company” 133G Meaning of “relevant regulated activity” 133H Investment bank 133I Meaning of “insurance company” 133J Meaning of “customer” 133K “Compensation” and related expressions 133L Associated companies 133M Application of sections 133A and 133B in relation to corporate partner 133N Powers to amend 134 Purchase or sale of woodlands 135 Relief in respect of mineral royalties 136 Lease premiums etc: reduction of receipts 137 Mineral exploration and access 138 Payments by companies liable to pool betting duty 139 Deduction for deemed employment payment 140 Special rules for partnerships 141 Deduction for deemed employment payments 141A Intermediaries providing worker's services to public authority or medium or large client 142 Deduction for site preparation expenditure 143 Allocation of site preparation expenditure 144 Site preparation expenditure: supplementary 145 Site restoration payments 146 Cemeteries and crematoria: introduction 147 Deduction for capital expenditure 148 Allocation of ancillary capital expenditure 149 Exclusion of expenditure met by subsidies 149A Niches, memorials and inscriptions: introduction 149B Allowable deductions: niches 149C Allowable deductions: memorials 149D Allowable deductions: inscriptions 149E Costs of the building 150 Revenue nature of expenditure 151 Allocation of expenditure 152 Interpretation of sections 150 and 151 153 Reserves of marketing authorities and certain other statutory bodies 154 Conditions to be met by reserve fund 155 Interpretation of sections 153 and 154 156 Meaning of “trading stock” 157 Trading stock appropriated by trader 158 Trading stock supplied by trader 159 Disposals not made in the course of trade 160 Acquisitions not made in the course of trade 161 Transfer pricing rules to take precedence 162 Valuation of trading stock on cessation 163 Meaning of “trading stock” 164 Basis of valuation of trading stock 165 Sale basis of valuation: sale to unconnected person 166 Sale basis of valuation: sale to connected person 167 Sale basis of valuation: election by connected persons 168 Connected persons 169 Cost to buyer of stock valued on sale basis of valuation 170 Meaning of “sale” and related expressions 171 Determination of questions 172 Application of Chapter 173 Relief for unremittable amounts 174 Restrictions on relief 175 Withdrawal of relief 176 Meaning of “know-how” etc 177 Disposal of know-how if trade continues to be carried on 178 Disposal of know-how as part of disposal of all or part of a trade 179 Seller controlled by buyer etc 180 Application of Chapter 181 Giving effect to positive and negative adjustments 182 Calculation of the adjustment 183 No adjustment for certain expenses previously brought into account 184 Cases where adjustment not required until assets realised or written off 185 Change from realisation basis to mark to market 186 Election for spreading if section 185 applies 187 Transfer of insurance business 188 Charge to tax on post-cessation receipts 189 Extent of charge to tax 190 Basic meaning of “post-cessation receipt” 191 Other rules about what counts as post-cessation receipts 192 Debts paid after cessation 193 Debts released after cessation 194 Transfer of rights if transferee does not carry on trade 195 Transfer of trading stock 196 Allowable deductions 197 Further rules about allowable deductions 198 Election to carry back 199 Deductions already made are not displaced 200 Election given effect in accounting period in which receipt is received 201 Provisions which must be given priority over this Part 202 Overview of Part 203 Overview of Chapter 204 Meaning of “property business” 205 UK property business 206 Overseas property business 207 Meaning of “generating income from land” 208 Activities not for generating income from land 209 Charge to tax on profits of a property business 210 Profits of a property business: application of trading income rules 211 Loan relationships and derivative contracts 212 Items treated as receipts and expenses 213 Certain amounts brought into account under Part 3 214 Relationship between rules prohibiting and allowing deductions 215 Overview of Chapter 216 Meaning of “short-term lease” 217 Lease premiums 218 Amount treated as lease premium where work required 219 Sums payable instead of rent 220 Sums payable for surrender of lease 221 Sums payable for variation or waiver of terms of lease 221A Sums to which sections 217 to 221 do not apply 222 Assignments for profit of lease granted at undervalue 223 Provisions supplementary to section 222 224 Sales with right to reconveyance 225 Sale and leaseback transactions 226 Provisions supplementary to sections 224 and 225 227 Circumstances in which additional calculation rule applies 228 The additional calculation rule 229 The additional calculation rule: special cases 230 Meaning of “unused amount” and “unreduced amount” 231 Deductions for expenses under section 232 232 Tenants under taxed leases treated as incurring expenses 233 Restrictions on section 232 expenses: the additional calculation rule 234 Restrictions on section 232 expenses: lease of part of premises 235 Limit on reductions and deductions 236 Payment of tax by instalments 237 Statement of accuracy for purposes of section 222 238 Claim for repayment of tax payable by virtue of section 224 239 Claim for repayment of tax payable by virtue of section 225 240 Appeals against proposed determinations 241 Section 240: supplementary 242 Determination by tribunal 243 Rules for determining effective duration of lease 244 Applying the rules in section 243 245 Information about effective duration of lease 246 Provisions about premiums 247 Interpretation 248 Furnished lettings 248A Wear and tear allowance: election 248B Meaning of “eligible” in relation to a dwelling-house 248C Effect of wear and tear allowance election 249 Acquisition of business: receipts from transferor's UK property business 250 Reverse premiums 250A Replacement domestic items relief 251 Deduction for expenditure on energy-saving items 252 Restrictions on relief 253 Regulations 254 Deduction for expenditure on sea walls 255 Transfer of interest in premises 256 Ending of lease of premises 257 Transfer involving person within the charge to income tax 258 Relief in respect of mineral royalties 259 Nature of item apportioned on sale of estate or interest in land 260 Mutual business 261 Adjustment on change of basis 262 Giving effect to positive and negative adjustments 263 Expenditure on integral features 270 Charge to tax on rent receivable in connection with a UK section 39(4) concern 271 Meaning of “rent receivable in connection with a UK section 39(4) concern” 272 Deduction for management expenses of owner of mineral rights 273 Relief in respect of mineral royalties 274 Meaning of “mineral lease or agreement” and “mineral royalties” 275 Extended meaning of “mineral royalties” etc in Northern Ireland 276 Power to determine what counts as “mineral royalties” 277 Charge to tax on rent receivable for a UK electric-line wayleave 278 Meaning of “rent receivable for a UK electric-line wayleave” 279 Extent of charge to tax 280 Charge to tax on post-cessation receipts 281 Extent of charge to tax 282 Basic meaning of “post-cessation receipt” 283 Other rules about what counts as a “post-cessation receipt” 284 Transfer of rights if transferee does not carry on UK property business 285 Allowable deductions 286 Election to carry back 287 Provisions which must be given priority over this Part 288 Priority between Chapters within this Part 289 Effect of company starting or ceasing to be within charge to corporation tax 290 Overseas property businesses and overseas land: adaptation of rules 291 Meaning of “lease” and “premises” 292 Overview of Part 293 Construction of references to profits or losses from loan relationships 294 Matters treated as loan relationships 295 General rule: profits arising from loan relationships chargeable as income 296 Profits and deficits to be calculated using credits and debits given by this Part 297 Trading credits and debits to be brought into account under Part 3 298 Meaning of trade and purposes of trade 299 Charge to tax on non-trading profits 300 Method of bringing non-trading deficits into account 301 Calculation of non-trading profits and deficits from loan relationships: non-trading credits and debits 302 “Loan relationship”, “creditor relationship”, “debtor relationship” 303 “Money debt” 304 “Related transaction” 305 Payments, interest, rights and liabilities under a loan relationship 306 Overview of Chapter 306A Matters in respect of which amounts to be brought into account 307 General principles about the bringing into account of credits and debits 308 Amounts recognised in determining a company's profit or loss 309 Companies without GAAP-compliant accounts 310 Power to make regulations about recognised amounts 311 Amounts not fully recognised for accounting purposes: introduction 312 Determination of credits and debits where amounts not fully recognised 313 Basis of accounting: “amortised cost basis”, “fair value accounting” and “fair value” 314 Power to make regulations about changes from amortised cost basis 315 Introduction to sections 316 and 318 316 Change of basis of accounting involving change of value 317 Carrying value 318 Change of accounting basis following cessation of loan relationship 319 General power to make regulations about changes in accounting policy 320 Credits and debits treated as relating to capital expenditure 320A Amounts recognised in other comprehensive income and not transferred to profit or loss 320B Hybrid capital instruments: amounts recognised in equity 321 Credits and debits recognised in equity 321A Restriction on debits resulting from release of loans to participators etc 322 Release of debts: cases where credits not required to be brought into account 323 Meaning of expressions relating to insolvency etc 323A Substantial modification: cases where credits not required to be brought into account 323B Insurers in financial difficulties: write-down orders 324 Restriction on debits resulting from revaluation 325 Restriction on credits resulting from reversal of disallowed debits 326 Writing off government investments 327 Disallowance of imported losses etc 328 Exchange gains and losses 328A Arrangements that have a “one-way exchange effect” 328B Meaning of “relevant exchange gain” and “relevant exchange loss” 328C Meaning of “test day” 328D Counterfactual currency movement assumptions 328E Counterfactual currency movement assumptions: treatment of options 328F Meaning of “option” 328G Meaning of “relevant contingent contract” and “operative condition” 328H Other interpretative provisions 329 Pre-loan relationship and abortive expenses 330 Debits in respect of pre-trading expenditure 330ZA Debits referable to times before UK property business etc carried on 330A Company is not, or has ceased to be, party to loan relationship 330B Exclusion of debit where relief allowed to another 330C Avoidance of double charge 331 Company ceasing to be party to loan relationship 332 Repo, stock lending and other transactions 333 Company ceasing to be UK resident 334 Non-UK resident company ceasing to hold loan relationship for section 333(2) purposes 335 Introduction to Chapter 336 Transfers of loans on group transactions 337 Transfers of loans on insurance business transfers 338 Meaning of company replacing another as party to loan relationship 339 Issues of new securities on certain cross-border reorganisations 340 Group transfers and transfers of insurance business: transfer at notional carrying value 341 Transferor using fair value accounting 342 Issues of new securities on reorganisations: disposal at notional carrying value 343 Receiving company using fair value accounting 344 Introduction 345 Transferee leaving group otherwise than because of exempt distribution 346 Transferee leaving group because of exempt distribution 347 Disapplication of Chapter where transferor party to avoidance 348 Introduction: meaning of “connected companies relationship” 349 Application of amortised cost basis to connected companies relationships 350 Companies beginning to be connected 351 Companies ceasing to be connected 352 Disregard of related transactions 352A Exclusion of credits on reversal of disregarded loss 352B Eliminating tax mismatch for loan relationships with qualifying link 353 Introduction to Chapter 354 Exclusion of debits for impaired or released connected companies debts 355 Cessation of connection 356 Exception to section 354: swapping debt for equity 357 Exception to section 354: insolvent creditors 358 Exclusion of credits on release of connected companies debts: general 359 Exclusion of credits on release of connected companies debts during creditor's insolvency 360 Exclusion of credits on reversal of impairments of connected companies debts 361 Acquisition of creditor rights by connected company at undervalue 361A The corporate rescue exception 361B The debt-for-debt exception 361C The equity-for-debt exception 361D Corporate rescue: debt released shortly after acquisition 362 Parties becoming connected where creditor's rights subject to impairment adjustment etc 362A Corporate rescue: debt released shortly after connection arises 363 Companies connected for sections 361 to 362A 363A Arrangements for avoiding section 361 or 362 364 Introduction to Chapter 365 Reduction of impairment loss debits where group relief claimed 366 Effect where credit for release brought into account on amortised cost basis 367 Reduction of credits exceeding impairment losses 368 Reduction of claims where there are earlier net consortium debits 369 Carry forward of claims where there are no net consortium debits 370 Group accounting periods 371 Interpretation 372 Introduction to Chapter 373 Late interest treated as not accruing until paid in some cases 374 Connection between debtor and person standing in position of creditor 375 Loans to close companies by participators etc 376 Interpretation of section 375 377 Party to loan relationship having major interest in other party 378 Loans by trustees of occupational pension schemes 379 Persons indirectly standing in the position of creditor 380 Partnerships involving companies 381 Determinations of credits and debits by company partners: general 382 Company partners using fair value accounting 383 Lending between partners and the partnership 384 Treatment of exchange gains and losses 385 Company partners' shares where firm owns deeply discounted securities 386 Overview of Chapter 387 Treatment of deficit on basic life assurance and general annuity business: introduction 388 Basic rule: deficit set off against income and gains of deficit period 389 Claim to carry back deficit 390 Meaning of “available profits” 391 Carry forward of surplus deficit to next accounting period 392 Exclusion of loan relationships of members of Lloyd's 393 General rules for some debtor relationships 394 Special rules for some debtor relationships 395 Investment trusts: profits or losses of a capital nature 396 Venture capital trusts: profits or losses of a capital nature 397 Credit unions 398 Overview of Chapter 399 Basic rules 400 Adjustments for changes in index 400A Adjustments for changes in index: relevant hedging schemes 400B Interpretation of section 400A: economic profits and losses 400C Meaning of “associated with” 401 Gilt strips 402 Market value of securities 403 Meaning of “strip” 404 Restriction on deductions etc relating to FOTRA securities 405 Certain non-UK residents with interest on 3½% War Loan 1952 Or After 406 Introduction 407 Postponement until redemption of debits for connected companies' deeply discounted securities 408 Companies connected for section 407 409 Postponement until redemption of debits for close companies' deeply discounted securities 410 Exceptions to section 409 411 Interpretation of section 409 412 Persons indirectly standing in the position of creditor 413 Issue of funding bonds 414 Redemption of funding bonds 415 Loan relationships with embedded derivatives 416 Election for application of sections 415 and 585 417 Further provisions about elections under section 416 418 Loan relationships involving connected debtor and creditor where debits exceed credits 418A Cases involving host contract 419 Section 418: supplementary 420 Assumptions where options etc apply 420A Amounts payable in respect of hybrid capital instruments 421 Introduction to Chapter 422 Transfer of loan relationship at notional carrying value 423 Transferor using fair value accounting 424 Reorganisations involving loan relationships 425 Original holder using fair value accounting 426 Tax avoidance etc 427 Procedure on application for clearance 428 Decision on application for clearance 429 Disapplication of Chapter where transparent entities involved 430 Interpretation 431 Introduction to Chapter 432 Meaning of “the transferee” and “transferor” 433 Transfer of loan relationship at notional carrying value 434 Transferor using fair value accounting 435 Reorganisations involving loan relationships 436 Original holder using fair value accounting 437 Tax avoidance etc 438 Disapplication of Chapter where transparent entities involved 439 Interpretation 440 Overview of Chapter 441 Loan relationships for unallowable purposes 442 Meaning of “unallowable purpose” 443 Restriction of relief for interest where tax relief schemes involved 444 Transactions not at arm's length: general 445 Disapplication of section 444 where Part 4 of TIOPA 2010 applies 446 Bringing into account adjustments made under Part 4 of TIOPA 2010 446A Non-market loans 447 Exchange gains and losses on debtor relationships: loans disregarded under Part 4 of TIOPA 2010 448 Exchange gains and losses on debtor relationships: equity notes where holder associated with issuer 450 Meaning of “corresponding debtor relationship” 452 Exchange gains and losses where loan not on arm's length terms 453 Connected parties deriving benefit from creditor relationships 454 Application of fair value accounting: reset bonds etc 455 Disposals for consideration not fully recognised by accounting practice 455A Debits arising from derecognition of creditor relationships 455B Counteracting effect of avoidance arrangements 455C Interpretation of section 455B 455D Examples of results that may indicate exclusion not applicable 456 Introduction to Chapter 457 Basic rule for deficits: carry forward to accounting periods after deficit period 458 Claim to carry forward deficit to later accounting periods 459 Claim to set off deficit against profits of deficit period or earlier periods 460 Time limits and procedure for claims under section 459(1) 461 Claim to set off deficit against other profits for the deficit period 462 Claim to carry back deficit to earlier accounting periods 463 Profits available for relief under section 462 463A Introduction to Chapter 463B Claim to set off deficit against profits of deficit period or earlier periods 463C Time limits for claims under section 463B(1) 463D Claim to set off deficit against profits for the deficit period 463E Claim to carry back deficit to earlier periods 463F Profits available for relief under section 463E 463G Carry forward of unrelieved deficit against total profits 463H Carry forward of unrelieved deficit against non-trading profits 463I Re-application of section 463G if any deficit remains after previous application 464 Priority of this Part for corporation tax purposes 465 Exclusion of distributions except in tax avoidance cases 465A Power to make regulations where accounting standards change 465B “Tax-adjusted carrying value” 466 Companies connected for an accounting period 467 Connections where partnerships are involved 468 Connection between companies to be ignored in some circumstances 469 Creditors who are financial traders 470 Section 469: supplementary provisions 471 Creditors who are insurance companies carrying on BLAGAB 472 Meaning of “control” 473 Meaning of “major interest” 474 Treatment of connected companies and partnerships for section 473 475 Meaning of expressions relating to exchange gains and losses 475A “Hedging relationship” 475B Meaning of “matched” 475C Meaning of “hybrid capital instrument” 476 Other definitions 477 Overview of Part 478 Relevant non-lending relationships: introduction 479 Relevant non-lending relationships not involving discounts 480 Relevant non-lending relationships involving discounts 481 Application of Part 5 to relevant non-lending relationships 482 Miscellaneous rules about amounts to be brought into account because of this Chapter 483 Exchange gains and losses: amounts treated as money debts 484 Provision not at arm's length: meaning of “interest” and “money debt” 485 Exclusion of debts where profits or losses within Part 7 or 8 486 Exclusion of exchange gains and losses in respect of tax debts etc 486A Overview 486B Disguised interest to be regarded as profit from loan relationship 486C Exclusion where return otherwise taxable 486D Exclusion where arrangement has no tax avoidance purpose 486E Excluded shares 486F Introduction to Chapter 486G Consideration to be treated as loan relationship 487 Overview of Chapter 488 Meaning of “open-ended investment company” etc 489 Meaning of “offshore fund” etc 490 Holdings in OEICs, unit trusts and offshore funds treated as creditor relationship rights 491 Holding coming within section 490: opening valuations 492 Holding coming within section 490: calculation to undo avoidance 493 The qualifying investments test 494 Meaning of “qualifying investments” 495 Qualifying holdings 496 Meaning of “hedging relationship” 497 Power to change investments that are qualifying investments 498 Building society dividends and interest 499 Registered society payments treated as interest under loan relationship 500 Exclusion of interest where failure to make return 501 Introduction to Chapter 502 Meaning of “financial institution” 503 Purchase and resale arrangements 504 Diminishing shared ownership arrangements : initial acquisition 504A Diminishing shared ownership arrangements: refinancing 505 Deposit arrangements 506 Profit share agency arrangements 507 Investment bond arrangements 508 Provision not at arm's length: exclusion of arrangements from sections 503 to 507 509 Application of Part 5: general 510 Application of Part 5 to particular alternative finance arrangements 511 Purchase and resale arrangements 512 Diminishing shared ownership arrangements 513 Other arrangements 514 Exclusion of alternative finance return from consideration for sale of assets 515 Diminishing shared ownership arrangements : further provision 515A Diminishing shared ownership arrangements: further provision in respect of refinancing 516 Treatment of principal under profit sharing agency arrangements 517 Treatment of bond-holder under investment bond arrangements 518 Investment bond arrangements: treatment as securities 519 Investment bond arrangements: other provisions 520 Provision not at arm's length: non-deductibility of relevant return 521 Power to extend this Chapter to other arrangements 521A Introduction to Chapter 521B Application of Part 5 to certain shares as rights under creditor relationship 521C Shares accounted for as liabilities 521D Excepted shares 521E Unallowable purpose 521F Shares becoming or ceasing to be shares to which section 521B applies 522 Introduction to Chapter 523 Application of Part 5 to certain shares as rights under creditor relationship 524 Shares subject to outstanding third party obligations 525 Meaning of “interest-like investment” 526 Non-qualifying shares 527 The increasing value condition 528 Regulations about income-producing assets 529 The redemption return condition 530 The redemption return condition: excepted shares 531 The redemption return condition: unallowable purposes 532 The associated transactions condition 533 Power to change conditions for non-qualifying shares 534 Amounts to be brought into account where section 523 applies 535 Shares ceasing to be shares to which section 523 applies 536 Introduction to Chapter 537 Payments in return for capital contribution to partnership 538 Change of partnership shares 539 Introduction to Chapter 540 Manufactured interest treated as interest under loan relationship 541 Debits for deemed interest under stock lending arrangements disallowed 542 Introduction to Chapter 543 Meaning of creditor repo 544 Meaning of creditor quasi-repo 545 Ignoring effect on lender etc of sale of securities 546 Charge on lender for finance return in respect of the advance 547 Repo under arrangement designed to produce quasi-interest: tax avoidance 548 Meaning of debtor repo 549 Meaning of debtor quasi-repo 550 Ignoring effect on borrower of sale of securities 551 Relief for borrower for finance charges in respect of the advance 552 General provisions about arrangements 553 Persons buying or selling for others 554 Power to modify this Chapter 555 Cases where section 554 applies: non-standard repos 556 Meaning of securities and similar securities 557 Meaning of person receiving an asset 558 Interpretation of accounting expressions 559 Minor definitions 560 Introduction to Chapter 561 Meaning of “investment life insurance contract” 562 Contract to be loan relationship 563 Increased non-trading credits for BLAGAB and EEA taxed contracts 564 Section 563: interpretation 565 Relevant amount where the relevant company uses fair value accounting 566 Introduction 567 Gains on deemed surrenders to be brought into account on related transactions 568 Restriction on credits on old contracts: fair value accounting cases 569 Restriction on debits on old contracts: non-fair value accounting cases 570 Overview of Part 571 General rule: profits chargeable as income 572 Profits and losses to be calculated using credits and debits given by this Part 573 Trading credits and debits to be brought into account under Part 3 574 Non-trading credits and debits to be brought into account under Part 5 575 Overview of Chapter 576 “Derivative contract” 577 “Relevant contract” 578 Relevant contracts of a company and being party to such contracts 579 The accounting conditions 580 “Option” 581 “Future” 582 “Contract for differences” 583 “Underlying subject matter” 584 Hybrid derivatives with embedded derivatives 585 Loan relationships with embedded derivatives 586 Other contracts with embedded derivatives 587 Contract relating to holding in OEIC, unit trust or offshore fund 588 Associated transaction treated as derivative contract 589 Contracts excluded because of underlying subject matter: general 590 Disregard of subordinate or small value underlying subject matter 591 Conditions A to E mentioned in section 589(5) 592 Embedded derivatives treated as meeting condition in section 591 etc 593 Contracts where part of underlying subject matter is excluded property 594 Overview of Chapter 594A Matters in respect of which amounts are to be brought into account 595 General principles about the bringing into account of credits and debits 596 Meaning of “related transaction” 597 Amounts recognised in determining a company's profit or loss 598 Regulations about recognised amounts 599 Meaning of “amounts recognised for accounting purposes” 599A Amounts not fully recognised for accounting purposes: introduction 599B Determination of credits and debits where amounts not fully recognised 600 Contract which is or forms part of financial asset or liability 601 Contract relating to holding in OEIC, unit trust or offshore fund 602 Contract becoming one relating to holding in OEIC, unit trust or offshore fund 603 Associated transaction treated as derivative contract 604 Credits and debits treated as relating to capital expenditure 604A Amounts recognised in other comprehensive income and not transferred to profit or loss 605 Credits and debits recognised in equity 606 Exchange gains and losses 606A Arrangements that have a “one-way exchange effect” 606B Meaning of “relevant exchange gain” and “relevant exchange loss” 606C Meaning of “test day” 606D Counterfactual currency movement assumptions 606E Counterfactual currency movement assumptions: treatment of options 606F Meaning of “option” 606G Meaning of “relevant contingent contract” and “operative condition” 606H Other interpretative provisions 607 Pre-contract or abortive expenses 607ZA Debits referable to times before UK property business etc carried on 607A Company is not, or has ceased to be, party to derivative contract 607B Exclusion of debit where relief allowed to another 607C Avoidance of double charge 608 Company ceasing to be party to derivative contract 609 Company ceasing to be UK resident 610 Non-UK resident company ceasing to hold derivative contract for section 609(2) purposes 611 Release under statutory insolvency arrangement of liability under derivative contract 612 Overview of Chapter 613 Introduction to sections 614 and 615 614 Change of basis of accounting involving change of value 615 Change of accounting policy after ceasing to be party to derivative contract 616 Disapplication of fair value accounting 617 Election for section 616 not to apply 618 Elections under section 617: groups of companies 619 Partnerships involving companies 620 Determination of credits and debits by company partners 621 Company partners using fair value accounting 622 Contracts ceasing to be derivative contracts 623 Index-linked gilt-edged securities with embedded contracts for differences 624 Introduction to Chapter 625 Group member replacing another as party to derivative contract 626 Transactions to which section 625 applies 627 Meaning of company replacing another as party to derivative contract 628 Transferor using fair value accounting 629 Tax avoidance 630 Introduction to sections 631 and 632 631 Transferee leaving group otherwise than because of exempt distribution 632 Transferee leaving group because of exempt distribution 633 Mutual trading companies 634 Insurance companies 635 Creditor relationships: embedded derivatives which are options 636 Modifications of Chapter 5 637 Investment trusts: profits or losses of a capital nature 638 Venture capital trusts: profits or losses of a capital nature 639 Overview of Chapter 640 Credits and debits not to be brought into account under Part 5 641 Derivative contracts to be taxed on a chargeable gains basis 642 Exception from section 641 643 Contracts relating to land or certain tangible movable property 644 Income to be left out of account in determining whether section 643 applies 645 Creditor relationships: embedded derivatives which are options 646 Exclusions from section 645 647 Meaning of certain expressions in section 645 648 Creditor relationships: embedded derivatives which are exactly tracking contracts for differences 649 Meaning of certain expressions in section 648 650 Property based total return swaps 651 Credits and debits not to be brought into account under Part 3 or Part 5 652 Introduction to sections 653 to 655 653 Shares issued or transferred as a result of exercise of deemed option 654 Payment instead of disposal on exercise of deemed option 655 Ceasing to be party to debtor relationship when deemed option not exercised 656 Introduction to section 658 657 Meaning of “exactly tracking contract” in section 656 658 Chargeable gain or allowable loss treated as accruing 659 Meaning of “relevant credits” and “relevant debits” 660 Contract relating to holding in OEIC, unit trust or offshore fund 661 Contract which becomes derivative contract 662 Contracts ceasing to be derivative contracts 663 Contracts to which section 641 applies 664 Meaning of certain expressions in section 663 665 Introduction to section 666 666 Allowable loss treated as accruing 667 Shares acquired on exercise of non-embedded option 668 Shares acquired on running of future to delivery 669 Meaning of G and L in sections 667 and 668 670 Treatment of net gains and losses on exercise of option 671 Meaning of G, L and CV in section 670 672 Treatment of net gains and losses on disposal of certain embedded derivatives 673 Meaning of G, L and CV in section 672 674 Introduction to Chapter 675 Transfer of derivative contract at notional carrying value 676 Transferor using fair value accounting 677 Tax avoidance etc 678 Procedure on application for clearance 679 Decision on application for clearance 680 Disapplication of Chapter where transparent entities involved 681 Interpretation 682 Introduction to Chapter 683 Meaning of “the transferee” and “transferor” 684 Transfer of derivative contract at notional carrying value 685 Transferor using fair value accounting 686 Tax avoidance etc 687 Disapplication of Chapter where transparent entities involved 688 Interpretation 689 Overview of Chapter 690 Derivative contracts for unallowable purposes 691 Meaning of “unallowable purpose” 692 Allowance of accumulated net losses 693 Bringing into account adjustments under Part 4 of TIOPA 2010 694 Exchange gains and losses 695 Transfers of value to connected companies 695A Disguised distribution arrangements involving derivative contracts 696 Derivative contracts with non-UK residents 697 Exceptions to section 696 698 Disposals for consideration not fully recognised by accounting practice 698A Debits arising from derecognition of derivative contracts 698B Counteracting effect of avoidance arrangements 698C Interpretation of section 698B 698D Examples of results that may indicate exclusion not applicable 699 Priority of this Part for corporation tax purposes 700 Relationship of this Part to Part 5: loan relationships 701 Power to amend some provisions 701A Power to make regulations where accounting standards change 702 “Tax-adjusted carrying value” 703 “Chargeable asset” 704 “Creditor relationship” and “debtor relationship” 705 Expressions relating to exchange gains and losses 706 “Excluded body” 707 “Hedging relationship” 708 “Plain vanilla contract” 709 “Securities house” 710 Other definitions 711 Overview of Part 712 “Intangible asset” 713 “Intangible fixed asset” 714 “Royalty” 715 Application of this Part to goodwill 716 “Recognised” amounts and “GAAP-compliant accounts” 717 Companies without GAAP-compliant accounts 718 GAAP-compliant accounts: reference to consolidated group accounts 719 Accounting value 720 Introduction 721 Receipts recognised as they accrue 722 Receipts in respect of royalties so far as not dealt with under section 721 723 Revaluation 724 Negative goodwill 725 Reversal of previous accounting loss 726 Introduction 727 References to expenditure on an asset 728 Expenditure written off as it is incurred 729 Writing down on accounting basis 730 Writing down at fixed rate: election for fixed-rate basis 731 Writing down at fixed rate: calculation 732 Reversal of previous accounting gain 733 Overview of Chapter 734 Meaning of “realisation” 735 Asset written down for tax purposes 736 Asset shown in balance sheet and not written down for tax purposes 737 Apportionment in case of part realisation 738 Asset not shown in balance sheet 738A Realisation of assets previously subject to Northern Ireland rate 739 Meaning of “proceeds of realisation” 740 Abortive expenditure on realisation 741 Meaning of “chargeable intangible asset” and “chargeable realisation gain” 742 Asset written down on accounting basis 743 Asset written down at fixed rate 744 Effect of part realisation of asset 745 Introduction 746 “Non-trading credits” and “non-trading debits” 747 Assets held for purposes of trade 748 Assets held for purposes of property business 749 Assets held for purposes of mines, transport undertakings, etc 750 Assets held for purposes falling within more than one section 751 Non-trading gains and losses 752 Charge to tax on non-trading gains on intangible fixed assets 753 Treatment of non-trading losses 754 The relief: the “old asset” and “other assets” 755 Conditions relating to the old asset and its realisation 756 Conditions relating to expenditure on other assets 757 Claim for relief 758 How the relief is given: general 759 Determination of appropriate proportion of cost and adjusted cost 760 References to cost of asset where asset affected by change of accounting policy 761 Declaration of provisional entitlement to relief 762 Realisation and reacquisition 763 Disregard of deemed realisations and reacquisitions 764 Meaning of “company”, “group” and “subsidiary” 765 General rule: a company and its 75% subsidiaries form a group 766 Only effective 51% subsidiaries of principal company to be members of group 767 Principal company cannot be 75% subsidiary of another company 768 Company cannot be member of more than one group 769 Continuity of identity of group 770 Continuity where group includes an SE 771 Meaning of “effective 51% subsidiary” 772 Equity holders and profits or assets available for distribution 773 Supplementary provisions 774 Overview of Chapter 775 Transfers within a group 776 Meaning of “tax-neutral” transfer 777 Relief on realisation and reinvestment: application to group member 778 Relief on reinvestment: acquisition of group company: introduction 779 Rules that apply to cases within section 778(1) 780 Deemed realisation and reacquisition at market value 781 Character of credits and debits brought into account as a result of section 780 782 Certain transferees of businesses etc not treated as leaving group 782A Company leaving group because of relevant share disposal 783 Certain associated companies leaving group at the same time 784 Groups with a relevant connection 785 Principal company becoming member of another group 786 Character of credits and debits brought into account as a result of section 785 787 Company ceasing to be member of group because of exempt distribution 788 Provisions supplementing sections 780 to 787 789 Merger carried out for genuine commercial reasons 790 Provisions supplementing section 789 791 Application of roll-over relief in relation to degrouping charge 792 Reallocation of charge within group 793 Further requirements about elections under section 792 793A Effect of election under section 792 794 Application of roll-over relief in relation to reallocated charge 795 Recovery of charge from another group company or controlling director 796 Interpretation of section 795 797 Recovery under section 795: procedure etc 798 Recovery under section 795: time limit 799 Disregard of payments between group members for reliefs 800 Introduction 801 Right to dispose of or acquire excluded asset also excluded 802 Effect of partial exclusion 803 Non-commercial purposes etc 804 Assets for which capital allowances previously made 805 Rights over tangible assets 806 Financial assets 807 Rights in companies, trusts etc 807A Assets representing expenditure on separate creative production trade 809 Oil licences 810 Mutual trade or business 811 Sound recordings 812 Master versions of films 813 Computer software treated as part of cost of related hardware 814 Research and development 815 Election to exclude capital expenditure on software 816 Further provision about elections under section 815 816A Restrictions on goodwill and certain other assets 817 Overview of Chapter 818 Company reconstruction involving transfer of business 819 European cross-border transfers of business: introduction 820 Transfer of assets on European cross-border transfer of business 821 European cross-border mergers: introduction 822 Transfer of assets on European cross-border merger 823 Interpretation of sections 821 and 822 824 Transfer of business of building society to company 825 Application of sections 780 and 785 where transfer within section 824 occurs 826 Amalgamation of, or transfer of engagements by, certain societies 827 Claims to postpone charge on transfer 828 Relief on transfer 829 Charge on subsequent realisations 830 Exclusion from section 829 of group transfers 831 The genuine commercial transaction requirement and clearance 832 Procedure on application for clearance 833 Decision on application for clearance 834 Overview of Chapter 835 “Related party” 836 “Control” 837 “Major interest” 838 General rule 839 Rights and powers held jointly 840 Partnerships 841 “Participator” and “associate” 842 Introduction 843 Who are connected persons 844 Overview of Chapter 845 Transfer between company and related party treated as at market value 846 Transfers where provision subject to transfer pricing but section 147(3) or (5) does not apply 847 Transfers involving other taxes 848 Tax-neutral transfers 848A Assets held for purposes of exempt foreign permanent establishments 849 Transfers involving gifts of business assets 849A Disincorporation relief: transfer values for post-FA 2002 goodwill 849AB Grant of licence or other right treated as at market value 849AC Grants not at arm's length 849AD Grants involving other taxes 849B Circumstances in which restrictions on debits in respect of goodwill etc apply 849C Restrictions in a case within section 849B(4) or (5) 849D Restrictions in a case within section 849B(6) 850 Part realisation involving related party acquisition: exclusion of roll-over relief 851 Delayed payment of royalty by company to related party 852 Treatment of grants and other contributions to expenditure 853 Grants to be left out of account for tax purposes 854 Finance leasing etc 855 Further provision about regulations under section 854 856 Assets acquired or realised together 857 Deemed market value or arm’s length acquisition: adjustment where nil or negligible accounting value 858 Fungible assets 859 Asset ceasing to be chargeable intangible asset: deemed realisation at market value 860 Asset ceasing to be chargeable intangible asset: postponement of gain 861 Treatment of postponed gain on subsequent realisation 862 Treatment of postponed gain in other cases 863 Asset becoming chargeable intangible asset 863A Asset becoming chargeable intangible asset: EU exit charge 864 Tax avoidance arrangements to be ignored 865 Debits for expenditure not generally deductible for tax purposes 866 Delayed payment of employees' remuneration 867 Provisions supplementing section 866 868 Delayed payment of pension contributions 869 Bad debts etc 870 Assumptions for calculating chargeable profits 870A Claims for relief made under sections 152 and 153 of TCGA 1992 871 Introduction to Chapter 872 Adjustments in respect of change 873 Effect of application of section 872 in later period and subsequently 874 Original asset not subject to fixed-rate writing down 875 Effect of application of section 874 in later period and subsequently 876 Original asset subject to fixed-rate writing down 877 Election for fixed-rate writing down in relation to resulting asset 878 Exclusion of credits or debits brought into account under other provisions 879 Subsequent events affecting asset subject to adjustment under this Chapter 879A Introduction 879B Requirement to write down at a fixed rate 879C Restrictions on debits: pre-FA 2019 relevant assets 879D Pre-FA 2019 relevant asset: the first case 879E Pre-FA 2019 relevant asset: the second case 879F Pre-FA 2019 relevant asset: the third case 879G The preserved status condition etc 879H Pre-FA 2019 relevant asset: the fourth case 879I Restrictions on debits: no business or no qualifying IP assets acquired 879J Meaning of qualifying IP asset 879K Restrictions on debits: acquisition from individual or firm 879L Meaning of relevant business and third party acquisition 879M When the partial restrictions apply: qualifying IP assets 879N When the partial restrictions apply: acquisition from individual or firm 879O The partial restrictions on debits 879P Date of acquisition of relevant asset 880 Overview of Chapter 881 Meaning of “pre-FA 2002 assets” 882 Application of this Part to assets created or acquired on or after 1 April 2002 883 Assets treated as created or acquired when expenditure incurred 884 ... Goodwill: time of creation 885 Assets representing non-qualifying expenditure: time of creation 886 Assets representing production expenditure on films: time of creation 887 General rule 888 Cases where chargeable gains rule applies 889 Cases where capital allowances general rule applies 890 Fungible assets: application of section 858 891 Realisation and acquisition of fungible assets 892 Certain assets acquired on transfer of business or transfer within a group 893 Assets whose value derives from pre-FA 2002 assets 894 The preserved status conditions etc 895 Assets acquired in connection with disposals of pre-FA 2002 assets 896 Application to royalties 897 Application to pre-FA 2002 assets consisting of telecommunication rights 898 Relief where assets disposed of on or after 1 April 2002 899 Relief where degrouping charge on asset arises on or after 1 April 2002 900 Meaning of “chargeable asset within TCGA” in sections 898 and 899 900A Introduction 900B When an intangible fixed asset is a restricted asset: the first case 900C When an intangible fixed asset is a restricted asset: the second case 900D When an intangible fixed asset is a restricted asset: the third case 900E Special rule: section 900B case 900F Special rule: section 900C or 900D case 900G Meaning of “relieving acquisition” 900H Supplementary provision about when two persons are related 900I Acquisition of asset in pursuance of an unconditional obligation 900J Fungible assets: general 900K Fungible assets: pre-FA 2002 assets and restricted assets 900L Realisation of fungible assets: pre-FA 2002 assets and restricted assets 900M Acquisition of fungible assets: pre-FA 2002 assets and restricted assets 900N Debits in respect of a single asset comprising restricted assets 900O Interpretation 901 Effect of application of the I - E basis: non-trading amounts 902 Excluded assets 903 Elections to exclude capital expenditure on computer software 904 Transfers of life assurance business: transfers of assets treated as tax-neutral 905 Pre-FA 2002 assets: Lloyd's syndicate capacity 906 Priority of this Part for corporation tax purposes 907 Overview of Part 908 Charge to tax on profits from disposals of know-how 909 Exceptions to charge under section 908 910 Profits charged under section 908 911 Overview of Chapter 912 Charge to tax on profits from sales of patent rights 913 Profits charged under section 912 914 UK resident companies: proceeds of sale not received in instalments 915 UK resident companies: proceeds of sale received in instalments 916 Non-UK resident companies: proceeds of sale not received in instalments 917 Non-UK resident companies: proceeds of sale received in instalments 918 Winding up of a body corporate 919 Deduction of tax from payments to non-UK resident companies 920 Adjustments where tax has been deducted 921 Licences connected with patents 922 Rights to acquire future patent rights 923 Sums paid for Crown use etc treated as paid under licence 924 Relief for expenses: patent income 925 How relief is given under section 924 926 Contributions to expenditure 927 Contributions not made by public bodies nor eligible for tax relief 928 Exchanges 929 Apportionment where property sold together 930 Questions about apportionments affecting two or more persons 931 Meaning of “capital sums” etc 931A Charge to tax on distributions received 931B Exemption from charge to tax 931C Meaning of “qualifying territory” 931CA Further exemption where distribution received from CFC 931D Exemption from charge to tax 931E Distributions from controlled companies 931F Distributions in respect of non-redeemable ordinary shares 931G Distributions in respect of portfolio holdings 931H Distributions derived from transactions not designed to reduce tax 931I Dividends in respect of shares accounted for as liabilities 931J Schemes involving manipulation of controlled company rules 931K Schemes involving quasi-preference or quasi-redeemable shares 931L Schemes involving manipulation of portfolio holdings rule 931M Schemes in the nature of loan relationships 931N Schemes involving distributions for which deductions are given 931O Schemes involving payments for distributions 931P Schemes involving payments not on arm's length terms 931Q Schemes involving diversion of trade income 931R Election that distribution should not be exempt 931RA Chargeable gains 931S Meaning of “small company” 931T Meaning of “payer”, “recipient” and “relevant person” 931U Meaning of “ordinary share” and “redeemable” 931V Meaning of “scheme” and “tax advantage scheme” 931W Provisions which must be given priority over this Part 932 Overview of Part 933 Charge to tax on dividends of non-UK resident companies 934 Charge to tax on estate income 935 Absolute, limited and discretionary interests 936 Meaning of “UK estate” and “foreign estate” 937 Absolute interests in residue 938 Meaning of “the administration period”, “the final accounting period” and “the final tax year” 939 Limited interests in residue 940 Discretionary interests in residue 941 UK estates 942 Foreign estates 943 Absolute interests 944 Limited interests 945 Discretionary interests 946 Applicable rate for grossing up basic amounts of estate income 947 Aggregate income of the estate 948 Assumed income entitlement 949 Residuary income of the estate 950 Shares of residuary income of estate 951 Reduction in share of residuary income of estate 952 Applicable rate for determining assumed income entitlement (UK estates) 953 Introduction 954 Successive absolute interests 955 Assumed income entitlement of holder of absolute interest following limited interest 956 Payments in respect of limited interests followed by absolute interests 957 Holders of limited interests 958 Basic amount of estate income: successive limited interests 959 Apportionments 960 Relief in respect of tax relating to absolute interests 961 Relief in respect of tax relating to limited or discretionary interests 961A Meaning of “the relevant tax year” 962 Income from which basic amounts are treated as paid 962A Income from which sums within section 951(1)(b) are treated as paid 963 Income treated as bearing income tax 964 Transfers of assets etc treated as payments 965 Assessments, adjustments and claims after the administration period 966 Power to obtain information from personal representatives and beneficiaries 967 Statements relating to estate income 968 Meaning of “personal representatives” 969 Charge to tax on income from holding an office 970 Rule restricting deductions for bad debts 971 Overview of Chapter 972 Charge to tax under this Chapter 973 Amount of income treated as received 974 Charge to tax under this Chapter 975 Meaning of “foreign holdings” etc 976 Overview of Chapter 977 Charge to tax on annual payments not otherwise charged 978 Exemption for payments by persons liable to pool betting duty 979 Charge to tax on income not otherwise charged 980 Exemption for commercial occupation of woodlands in UK 981 Exemption for gains on financial futures 982 Provisions which must be given priority over this Part 983 Overview of Chapter 984 Chapter to form part of SIP code etc 985 References to a deduction being allowed to a company 986 Treatment of receipts under Chapter 987 Deduction for costs of setting up a Schedule 2 share incentive plan 988 Deductions for running expenses of a Schedule 2 share incentive plan 989 Deduction for contribution to plan trust 990 Withdrawal of deduction under section 989 991 Another deduction to be allowed if all acquired shares are awarded 992 Award of shares to excluded employee 993 Plan termination notice 994 Deduction for providing free or matching shares 995 Deduction for additional expense in providing partnership shares 996 Shares excluded from sections 994 and 995 997 No deduction for expenses in providing dividend shares 998 Withdrawal of deductions if share incentive plan ceases to be a Schedule 2 share incentive plan 999 Deduction for costs of setting up SAYE option scheme or CSOP scheme 1000 Deduction for costs of setting up employee share ownership trust 1001 Overview of Part 1002 “Employment” 1003 “Shares” etc 1004 Groups, consortiums and commercial associations of companies 1005 Other definitions 1006 Overview of Chapter 1007 Basic requirements for relief under Chapter 2 1007A Application of Chapter in relation to employees of overseas companies who work for companies in the UK 1008 Conditions relating to shares acquired 1009 Conditions relating to employee's income tax position 1010 Calculation of relief if shares are neither restricted nor convertible 1011 Calculation of relief if shares are restricted or convertible 1012 Reduction in amount of relief 1013 How the relief is given 1014 Overview of Chapter 1015 Basic requirements for relief under Chapter 3 1015A Application of Chapter: employees of overseas companies who take up employment with a UK company 1015B Application of Chapter in relation to employees of overseas companies who work for companies in the UK 1016 Conditions relating to shares acquired 1017 Condition relating to employee's income tax position 1018 Calculation of relief if shares are neither restricted nor convertible 1019 Calculation of relief if shares are restricted or convertible 1020 Reduction in amount of relief 1021 How the relief is given 1022 Takeover of company whose shares are subject to option 1023 Supplementary provision for purposes of section 1022 1024 Transfer of qualifying business by group transfers 1025 Additional relief available if shares acquired are restricted shares 1025A Application of Chapter: employees of overseas companies who take up employment with, or work for, a UK company 1025B Application of Chapter where original relief a consequence of section 1007A, 1015A or 1015B 1026 Relief available on occurrence of chargeable event 1027 Relief available on death of employee 1028 Supplementary provision for purposes of sections 1026 and 1027 1029 Transfer of qualifying business by group transfers 1030 Application of Chapter 1030A Application of Chapter: employees of overseas companies who take up employment with, or work for, a UK company 1030B Application of Chapter where original relief a consequence of section 1007A, 1015A or 1015B 1031 Additional relief available if shares acquired are convertible shares etc 1032 Meaning of “chargeable event” 1033 Relief available on occurrence of chargeable event 1034 Relief available following death of employee 1035 Supplementary provision for purposes of sections 1033 and 1034 1036 Transfer of qualifying business by group transfers 1037 Priority of Chapter 1 of Part 11 1038 Exclusion of other deductions 1038A Exclusion of deductions for share options: shares not acquired 1038B Employee shareholder shares 1039 Overview of Part 1040 No overlapping claims under Chapters 1A and 2 1040ZA Restriction on claiming other tax reliefs 1040A R&D expenditure credits 1041 “Research and development” 1042 “Relevant research and development” 1042A Overview of Chapter 1042B Entitlement to credit 1042C Claiming the credit 1042D Qualifying expenditure: in-house R&D 1042E Qualifying expenditure: payments for contracted out R&D 1042F Qualifying expenditure: activity as contractor for irrelievable client 1042G Percentage of qualifying expenditure translated into credit 1042H Expenditure credit to count as taxable receipt 1042I Redemption of value of expenditure credit 1042J Treatment of deduction to comply with PAYE and NIC limit 1042K Amount of notional tax deduction 1042L Treatment of notional tax deduction 1042M Priority of discharge 1042N Amounts surrendered to other group companies 1042O Adaptation of entitlement for certain insurance businesses 1043 Overview of Chapter 1044 Additional deduction in calculating profits of trade 1045 Alternative treatment for pre-trading expenditure: deemed trading loss 1045ZA R&D intensity condition 1045A Requirement to make a claim notification 1046 Relief only available where company is going concern 1047 Elections under section 1045 1048 Treatment of deemed trading loss under section 1045 1049 Restriction on consortium relief 1050 R&D threshold 1051 Qualifying Chapter 2 expenditure 1052 Qualifying expenditure: in-house R&D 1053 Qualifying expenditure: payments for contracted out R&D 1053A Qualifying expenditure: activity as contractor for irrelievable client 1054 Entitlement to and payment of tax credit 1054A Requirement to make a claim notification 1055 Meaning of “Chapter 2 surrenderable loss” 1056 Amount of trading loss which is “unrelieved” 1057 Tax credit only available where company is going concern 1058 Amount of tax credit 1058A Relevant expenditure on workers 1058B Total amount of company's PAYE and NIC liabilities 1058C Avoiding double counting of PAYE and NIC liabilities 1058D Exceptions to tax credit cap 1059 Total amount of company's PAYE and NIC liabilities 1060 Use of credit to pay corporation tax 1061 Tax credit payment not income of company 1062 Restriction on losses carried forward where tax credit claimed 1062A Insurance company to be treated as large company 1063 Additional deduction in calculating profits of trade 1064 R&D threshold 1065 Qualifying Chapter 3 expenditure 1066 Expenditure on sub-contracted R&D undertaken in-house 1067 Expenditure on sub-contracted R&D not undertaken in-house 1068 Additional deduction in calculating profits of trade 1069 R&D threshold 1070 Qualifying Chapter 4 expenditure 1071 Subsidised qualifying expenditure on in-house direct R&D 1072 Subsidised qualifying expenditure on contracted out R&D 1073 Capped R&D expenditure 1074 Additional deduction in calculating profits of trade 1075 R&D threshold 1076 Qualifying Chapter 5 expenditure 1077 Qualifying expenditure on in-house direct R&D 1078 Qualifying expenditure on contracted out R&D 1079 Qualifying expenditure on contributions to independent R&D 1080 Entitlement to relief: I minus E basis ... section-1082 section-1083 section-1084 1085 Overview of Chapter 1086 Meaning of “qualifying R&D activity” 1087 Deduction in calculating profits of trade 1088 Declaration about effect of relief 1089 SMEs: amount of deduction 1090 Modification of section 1089 for larger SMEs 1091 Amount of deduction 1092 SMEs: deemed trading loss for pre-trading expenditure 1093 Modification of section 1092 for larger SMEs 1094 Relief only available to SME where company is going concern 1095 Elections under section 1092 1096 Treatment of deemed trading loss under section 1092 1097 R&D threshold 1098 Meaning of “qualifying Chapter 7 expenditure” 1099 SMEs: qualifying expenditure “for” an accounting period 1100 Qualifying expenditure “for” an accounting period 1101 Qualifying expenditure on in-house direct R&D 1102 Qualifying expenditure on contracted out R&D 1103 Entitlement to and payment of tax credit 1104 Meaning of “Chapter 7 surrenderable loss” 1105 Amount of trading loss which is “unrelieved” 1106 Tax credit only available where company is going concern 1107 Amount of tax credit 1108 Total amount of company's PAYE and NIC liabilities 1109 Payment of tax credit 1110 Tax credit payment not income of company 1111 Restriction on losses carried forward where tax credit claimed 1112 Artificially inflated claims for relief 1112A Overview of Chapter 1112B Cap by reference to PAYE and NIC liabilities 1112C Calculation of relevant PAYE and NIC liabilities 1112D Total PAYE and NIC liabilities 1112E Exception for companies creating or managing intellectual property 1112F Restriction of credit and relief to companies that are going concerns 1112G Meaning of “going concern” 1112H No credit payable if certain tax matters outstanding 1112I Transactions aimed at obtaining credit or relief to be disregarded 1112J Chapter 2 relief for Northern Ireland companies 1119 “Small or medium-sized enterprise” 1120 Qualifications to section 1119 1120A Enterprise treated as an SME where related enterprise becomes large 1120B Enterprise treated as an SME where acquired by an SME 1121 “Larger SME” 1122 “Large company” 1123 “Staffing costs” 1124 Staffing costs: attributable expenditure 1125 “Software , data licences, cloud computing services or consumable items” 1126 Software , data licences, cloud computing services or consumable items: attributable expenditure 1126ZA Attributable expenditure: special rules for data and cloud computing 1126A Attributable expenditure: special rules for consumable items 1126B Attributable expenditure: further provision 1127 “Qualifying expenditure on externally provided workers” 1128 “Externally provided worker” 1129 Qualifying expenditure on externally provided workers: connected persons 1130 Election for connected persons treatment 1131 Qualifying expenditure on externally provided workers: other cases 1131A Sections 1129 and 1131: secondary Class 1 NICS paid by company 1132 External workers: attributable expenditure 1132A “Qualifying earnings” 1133 Contracted out research and development 1134 Qualifying element of contractor payment: connected persons 1135 Election for connected persons treatment 1136 Qualifying element of contractor payment: other cases 1137 Accounting periods: company not within charge to corporation tax 1138 “Subsidised expenditure” 1138A Externally provided workers and contractors: R&D undertaken abroad 1138B Exempt foreign permanent establishments 1139 “Intellectual property” 1139A Expenditure incurred on payments 1140 “Relevant payments to the subjects of a clinical trial” 1140A Groups 1141 “Payment period” 1142 Ineligible companies 1142A “Claim notification” and “claim notification period” 1142B “R&D claim” 1142C Right to payment of credit inalienable 1142D General rule against payments of credit to nominees 1142E Orders and regulations: ancillary provision 1143 Overview of Part 1144 “Qualifying land remediation expenditure” 1145 Land “in a contaminated state” 1145A Land “in a derelict state” 1145B Exclusion of nuclear sites 1146 “Relevant contaminated land remediation” 1146A “Relevant derelict land remediation” 1147 Deduction for capital expenditure 1148 Election under section 1147 1149 Additional deduction for qualifying land remediation expenditure 1150 No relief if company responsible for contamination or dereliction or polluter has interest 1151 Entitlement to and payment of tax credit 1152 Meaning of “qualifying land remediation loss” 1153 Amount of a loss which is “unrelieved” 1154 Amount of tax credit 1155 Payment of tax credit 1156 Tax credit payment not income of company 1157 Exclusion for capital gains purposes of certain expenditure 1158 Restriction on losses carried forward where tax credit claimed 1159 Limitation on relief under Chapter 2 1160 Provision in respect of I minus E basis 1161 Relief in respect of I minus E basis: ... expenses payable 1162 Additional relief 1163 No relief if company responsible for contamination or dereliction or polluter has interest 1164 Entitlement to tax credit 1165 Meaning of “qualifying BLAGAB loss” 1166 Amount of tax credit 1167 Payment of tax credit etc 1168 Restriction on carrying forward expenses payable where tax credit claimed 1169 Artificially inflated claims for relief or tax credit 1170 “Staffing costs” 1171 Staffing costs attributable to relevant land remediation 1172 Expenditure on materials 1173 Expenditure incurred because of contamination or dereliction 1174 Sub-contractor payments 1175 Connected sub-contractors 1176 “Qualifying expenditure on sub-contracted land remediation”: other cases 1177 “Subsidised expenditure” 1178 Persons having a “relevant connection” to a company 1178A “Major interest in land” 1179 Other definitions 1179A Overview of Part 1179AA Qualifying companies and productions 1179AB UK expenditure 1179AC Company tax returns 1179AD Groups 1179AE Regulations 1179B Election to tax qualifying production as separate trade 1179BA Duration of separate trade 1179BB Calculation of profits 1179BC When costs are to be taken as incurred 1179BD Preliminary expenditure 1179BE Treatment of certain capital amounts as revenue 1179BF Carrying forward of production losses 1179BG Transfer of terminal loss to other qualifying production 1179C Entitlement to expenditure credit 1179CA Amount of expenditure credit 1179CB Expenditure credit to count as taxable receipt 1179CC Redemption of value of expenditure credit 1179CD Treatment of notional tax deduction 1179CE Amounts surrendered to other group companies 1179CF Priority of discharge 1179CG No credit payable if company in administration or liquidation 1179CH No credit payable if certain tax matters outstanding 1179CI Disqualifying arrangements and non-commercial transactions 1179D Application of Chapters 2 and 3 to films and television programmes 1179DA Meaning of “film” 1179DB Qualifying films 1179DC Theatrical release condition 1179DD Meaning of “television programme” 1179DE Qualifying television programmes 1179DF Categories of qualifying programme 1179DG Excluded programmes 1179DH Broadcast condition 1179DI Slot length and hourly cost conditions 1179DJ British certification condition: provisional and final satisfaction 1179DJA Films: certification as low-budget film 1179DK Television programmes: test for certification 1179DL Television programmes: applications for certification 1179DM Television programmes: certification and revocation 1179DN Disclosure of information for certification purposes 1179DO UK expenditure condition: provisional and final satisfaction 1179DP Meaning of “production company” 1179DQ Qualifying co-productions and co-producers 1179DR Expenditure that qualifies for credit 1179DS Meaning of “core expenditure” 1179DT Excluded expenditure: research and development and unpaid amounts 1179DU Excluded expenditure: non-arm’s-length dealings with connected parties 1179DV Percentage of qualifying expenditure translated into credit 1179DW When the separate trade begins 1179DX Costs and income of separate trade 1179DY Accounting periods 1179DZ Effect of move out of higher-percentage category 1179E Production qualifying consecutively as film and television programme 1179EA Meaning of “production activities”, “principal photography” and “animation” 1179EB When film or programme is completed 1179EC Special credit for visual effects 1179F Application of Chapters 2 and 3 to video games 1179FA Video games that are qualifying video games 1179FB Intended supply condition 1179FC British certification condition: provisional and final satisfaction 1179FD Test for certification 1179FE Applications for certification 1179FF Certification and revocation 1179FG Disclosure of information for certification purposes 1179FH UK expenditure condition 1179FI Meaning of “development company” 1179FJ Expenditure that qualifies for credit 1179FK Meaning of “core expenditure” 1179FL Excluded expenditure: research and development and unpaid amounts 1179FM Excluded expenditure: non-arm’s-length dealings with connected parties 1179FN Percentage of qualifying expenditure translated into credit 1179FO When the separate trade begins 1179FP Costs and income of separate trade 1179FQ Accounting periods 1179FR Meaning of “development activities” 1179FS When video game is completed 1180 Overview of Part 1181 “Film” etc 1182 “Film production company” 1183 “Film-making activities” etc 1184 “Production expenditure”, “core expenditure” ... 1185 “UK expenditure” etc 1186 “Qualifying co-production” and “co-producer” 1187 “Company tax return” 1188 Activities of film production company treated as a separate trade 1189 Calculation of profits or losses of separate film trade 1190 Income from the film 1191 Costs of the film 1192 When costs are taken to be incurred 1193 Pre-trading expenditure 1194 Estimates 1195 Availability and overview of film tax relief 1196 Intended theatrical release 1196A Intended release or broadcast 1197 British film 1198 UK expenditure 1199 Additional deduction for qualifying expenditure 1200 Amount of additional deduction 1201 Film tax credit claimable if company has surrenderable loss 1202 Surrendering of loss and amount of film tax credit 1203 Payment in respect of film tax credit 1204 No account to be taken of amount if unpaid 1205 Artificially inflated claims for additional deduction or film tax credit 1206 Confidentiality of information 1207 Wrongful disclosure 1208 Application of sections 1209 and 1210 1209 Restriction on use of losses while film in production 1210 Use of losses in later periods 1211 Terminal losses 1212 Introduction 1213 Certification as a British film 1214 The UK expenditure condition 1215 Film tax relief on basis that film is limited-budget film 1216 Time limit for amendments and assessments 1216A Overview of Part 1216AA “Television programme” 1216AB “Relevant programme” 1216AC Types of programme eligible to be relevant programmes 1216AD Excluded programmes 1216ADA Certain children's programmes not to be excluded programmes 1216AE Television production company 1216AF “Television production activities” etc 1216AG “Production expenditure” and “core expenditure” 1216AH “UK expenditure” etc 1216AI “Qualifying co-production” and “co-producer” 1216AJ “Company tax return” 1216B Activities of television production company treated as a separate trade 1216BA Calculation of profits or losses of separate programme trade 1216BB Income from the relevant programme 1216BC Costs of the relevant programme 1216BD When costs are taken to be incurred 1216BE Pre-trading expenditure 1216BF Estimates 1216C Availability and overview of television tax relief 1216CA Intended for broadcast 1216CB British programme 1216CC Applications for certification 1216CD Certification and withdrawal of certification 1216CE UK expenditure 1216CF Additional deduction for qualifying expenditure 1216CG Amount of additional deduction 1216CH Television tax credit claimable if company has surrenderable loss 1216CI Surrendering of loss and amount of television tax credit 1216CJ Payment in respect of television tax credit 1216CK No account to be taken of amount if unpaid 1216CL Artificially inflated claims for additional deduction or tax credit 1216CM Confidentiality of information 1216CN Wrongful disclosure 1216D Application of sections 1216DA and 1216DB 1216DA Restriction on use of losses while programme in production 1216DB Use of losses in later periods 1216DC Terminal losses 1216E Introduction 1216EA Certification as a British programme 1216EB The UK expenditure condition 1216EC Time limit for amendments and assessments 1217A Overview of Part 1217AA “Video game” etc 1217AB Video games development company 1217AC “Video game development activities” etc 1217AD “Core expenditure” 1217AE “European expenditure” etc 1217AF “Company tax return” 1217B Activities of video games development company treated as a separate trade 1217BA Calculation of profits or losses of separate video game trade 1217BB Income from the video game 1217BC Costs of the video game 1217BD When costs are taken to be incurred 1217BE Estimates 1217C Availability and overview of video games tax relief 1217CA Intended for supply 1217CB British video game 1217CC Applications for certification 1217CD Certification and withdrawal of certification 1217CE European expenditure 1217CF Additional deduction for qualifying expenditure 1217CG Amount of additional deduction 1217CH Video game tax credit claimable if company has surrenderable loss 1217CI Surrendering of loss and amount of video game tax credit 1217CJ Payment in respect of video game tax credit 1217CK No account to be taken of amount if unpaid 1217CL Artificially inflated claims for additional deduction or tax credit 1217CM Confidentiality of information 1217CN Wrongful disclosure 1217D Application of sections 1217DA and 1217DB 1217DA Restriction on use of losses while video game in development 1217DB Use of losses in later periods 1217DC Terminal losses 1217E Introduction 1217EA Certification as a British video game 1217EB The European expenditure condition 1217EC Time limit for amendments and assessments 1217F Overview 1217FA “Theatrical production” 1217FB Productions not regarded as theatrical 1217FC “Production company” 1217G How a company qualifies for relief 1217GA The commercial purpose condition 1217GB The UK expenditure condition 1217GC “Core expenditure” 1217H Claim for additional deduction 1217I Introduction to sections 1217IA to 1217IF 1217IA Calculation of profits or losses of separate theatrical trade 1217IB Income from the production 1217IC Costs of the production 1217ID When costs are taken to be incurred 1217IE Pre-trading expenditure 1217IF Estimates 1217J Amount of additional deduction 1217JA “Qualifying expenditure” 1217K Theatre tax credit claimable if company has surrenderable loss 1217KA Amount of surrenderable loss 1217KB Payment in respect of theatre tax credit 1217KC Limit on State aid 1217KD No claim if company in administration or liquidation 1217LA Tax avoidance arrangements 1217LB Transactions not entered into for genuine commercial reasons 1217M Application of sections 1217MA to 1217MC 1217MA Restriction on use of losses before completion period 1217MB Use of losses in the completion period 1217MC Terminal losses 1217N Provisional entitlement to relief 1217NA Clawback of provisional relief 1217O Activities involved in developing, producing, running or closing a production 1217OA “Company tax return” 1217OB Index 1217P Overview 1217PA “Orchestral concert” 1217PB Production company 1217Q Separate orchestral trade 1217QA Election for concert series 1217QB Calculation of profits or losses of separate orchestral trade 1217QC Income from the production 1217QD Costs of the production 1217QE When costs are taken to be incurred 1217QF Pre-trading expenditure 1217QG Estimates 1217R Overview of orchestra tax relief 1217RA Companies qualifying for orchestra tax relief 1217RB The UK expenditure condition 1217RC “Core expenditure” 1217RD Claim for additional deduction 1217RE Amount of additional deduction 1217RF “Qualifying expenditure” 1217RG Orchestra tax credit claimable if company has surrenderable loss 1217RH Amount of surrenderable loss 1217RI Payment in respect of orchestra tax credit 1217RJ Limit on State aid 1217RK No account to be taken of amount if unpaid 1217RKA No claim if company in administration or liquidation 1217RL Tax avoidance arrangements 1217RM Transactions not entered into for genuine commercial reasons 1217S Application of sections 1217SA to 1217SC 1217SA Restriction on use of losses before completion period 1217SB Use of losses in the completion period 1217SC Terminal losses 1217T Provisional entitlement to relief 1217TA Clawback of provisional relief 1217U Interpretation 1218ZA Overview 1218ZAA “Exhibition” 1218ZAB “Touring exhibition” 1218ZAC Primary production company 1218ZAD Secondary production company 1218ZB Separate exhibition trade 1218ZBA Calculation of profits or losses of separate exhibition trade 1218ZBB Income from the production 1218ZBC Costs of the production 1218ZBD When costs are taken to be incurred 1218ZBE Pre-trading expenditure 1218ZBF Estimates 1218ZC Overview of museums and galleries exhibition tax relief 1218ZCA Companies qualifying for museums and galleries exhibition tax relief 1218ZCB Interpretation of section 1218ZCA(3)(b) and (c) 1218ZCC The UK expenditure condition 1218ZCD “Core expenditure” 1218ZCE Claim for additional deduction 1218ZCF Amount of additional deduction 1218ZCG “Qualifying expenditure” 1218ZCH Museums and galleries exhibition tax credit claimable if company has surrenderable loss 1218ZCI Amount of surrenderable loss 1218ZCJ Payment in respect of museums and galleries exhibition tax credit 1218ZCK Maximum museums and galleries exhibition tax credits payable 1218ZCL No account to be taken of amount if unpaid 1218ZCLA No claim if company in administration or liquidation 1218ZCM Tax avoidance arrangements 1218ZCN Transactions not entered into for genuine commercial reasons 1218ZD Application of sections 1218ZDA to 1218ZDC 1218ZDA Restriction on use of losses before completion period 1218ZDB Use of losses in the completion period 1218ZDC Terminal losses 1218ZE Provisional entitlement to relief 1218ZEA Clawback of provisional relief 1218ZF Regulations about activities in relation to an exhibition 1218ZFA Interpretation 1217 Overview of Part 1218 “Company with investment business” and “investment business” 1218A Overview of Part 1218B Overview of Part 1219 Expenses of management of a company's investment business 1220 Meaning of “unallowable purpose” 1221 Amounts treated as expenses of management 1222 Income from a source not charged to tax 1223 Carrying forward expenses of management and other amounts 1223A Exception for basic life assurance and general annuity business 1224 Accounting period to which expenses are referable 1225 Accounts conforming with GAAP 1226 Accounts not conforming with GAAP 1227 Accounts not drawn up 1227A Management expenses in relation to salaried members of limited liability partnerships 1228 Credits that reverse debits 1229 Claw back of relief 1230 Meaning of “reversal amount” 1231 Absence of accounts 1232 Chapter applies to amounts not otherwise relieved 1233 Excess capital allowances 1234 Payments for restrictive undertakings 1235 Employees seconded to charities and educational establishments 1236 Payroll deduction schemes 1237 Counselling and other outplacement services 1238 Retraining courses 1239 Redundancy payments and approved contractual payments 1240 Payments in respect of employment wholly in employer's business 1241 Payments in respect of employment in more than one capacity 1242 Additional payments 1243 Payments made by the Government 1244 Contributions to local enterprise organisations or urban regeneration companies 1244A Contributions to flood and coastal erosion risk management projects 1245 Payments to Export Credits Guarantee Department 1246 Levies under FISMA 2000 1247 Introduction 1248 Expenses in connection with arrangements for securing a tax advantage 1249 Unpaid remuneration 1250 Unpaid remuneration: supplementary 1251 Car ... hire 1252 Industrial development grants 1253 Contributions to local enterprise organisations or urban regeneration companies: disqualifying benefits 1253A Contributions to flood and coastal erosion risk management projects: refunds etc 1254 Repayments under FISMA 2000 1255 Meaning of some accounting terms 1256 Overview of Part 1257 General provisions 1258 Assessment of firms 1258A Bare trusts 1259 Calculation of firm's profits and losses 1260 Section 1259: supplementary 1261 Accounting periods of firms 1262 Allocation of firm's profits or losses between partners 1263 Profit-making period in which some partners have losses 1264 Loss-making period in which some partners have profits 1264A Excess profit allocation to non-individual partners etc 1265 Apportionment of profit share between partner's accounting periods 1266 Resident partners and double taxation agreements 1267 Various rules for trades and property businesses 1268 Election for spreading under Chapter 14 of Part 3 1269 Interpretation of sections 1267 and 1268 1270 Special provisions about farming and property income 1271 Sale of patent rights: effect of partnership changes 1272 Sale of patent rights: effect of later cessation of trade 1273 Limited liability partnerships 1273A Limited liability partnerships: salaried members 1274 Unremittable income: introduction 1275 Claim for relief for unremittable income 1276 Withdrawal of relief 1277 Income charged on withdrawal of relief after source ceases 1278 Valuing unremittable income 1279 Exemption of profits from securities free of tax to residents abroad (“FOTRA securities”) 1280 Section 1279: supplementary provision 1281 Income from savings certificates 1282 Income from Ulster Savings Certificates 1283 Interest from tax reserve certificates 1284 Housing grants 1285 UK company distributions 1286 VAT repayment supplements 1287 Incentives to use electronic communications 1288 Unpaid remuneration 1289 Unpaid remuneration: supplementary 1290 Employee benefit contributions 1291 Making of “employee benefit contributions” 1292 Provision of qualifying benefits 1293 Timing and amount of certain qualifying benefits 1294 Provision or payment out of employee benefit contributions 1295 Profits calculated before end of 9 month period 1296 Interpretation of sections 1290 to 1296 1297 Basic life assurance and general annuity business 1298 Business entertainment and gifts 1299 Business entertainment: exceptions 1300 Business gifts: exceptions 1301 Restriction of deductions for annual payments 1301A Restriction of deductions for interest 1301B Qualifying charitable donations 1302 Social security contributions 1303 Penalties, interest and VAT surcharges and interest 1304 Crime-related payments 1305 Dividends and other distributions 1305A Avoidance schemes involving the transfer of corporate profits 1305B Avoidance schemes involving certain non-derecognition liabilities 1306 Losses calculated on same basis as miscellaneous income 1307 Apportionment etc of miscellaneous profits and losses to accounting period 1308 Expenditure brought into account in determining value of intangible asset 1309 Payments treated as made to visiting performers 1310 Orders and regulations 1311 Apportionment to different periods 1312 Abbreviated references to Acts 1313 Activities in UK sector of continental shelf 1314 Meaning of “caravan” 1315 Claims and elections 1316 Meaning of “connected” persons and “control” 1317 Meaning of “farming” and related expressions 1318 Meaning of grossing up 1319 Other definitions 1320 Interpretation: Scotland 1321 Interpretation: Northern Ireland 1322 Minor and consequential amendments 1323 Power to make consequential provision 1324 Power to undo changes 1325 Transitional provisions and savings 1326 Repeals and revocations 1327 Index of defined expressions 1328 Extent 1329 Commencement 1330 Short title SCHEDULE 1 Minor and consequential amendments SCHEDULE 2 Transitionals and savings SCHEDULE 3 Repeals and revocations SCHEDULE 4 Index of defined expressions
What to do with it
As published
389 Claim to carry back deficit
(1) If the deficit exceeds the income and gains for the deficit period referred to in section 388(1), the company may make a claim for the whole or part of the excess (“the claim amount”)—
(a) to be carried back for up to 3 accounting periods ending within the permitted period, and
(b) to be set off against the available profits of the company in those periods in accordance with subsection (2).
(2) The claim amount reduces the company's available profits in the most recent accounting period of the company, before any remainder reduces those in the next most recent accounting period and then those in the next most recent accounting period.
(2A) If any of the claim amount is carried back in accordance with this section to an accounting period, the amount which is so carried back is to be left out of account for the purpose of applying section 93 of FA 2012 in the case of that period.
(3) For the meaning of “available profits”, see section 390.
(4) In this section and that section “permitted period” means the period of 12 months immediately before the deficit period.
(5) A claim under this section must be made—
(a) within the period of 2 years after the end of the deficit period, or
(b) within such further period as an officer of Revenue and Customs allows.
Your wording
Your change, as a redline
389 Claim to carry back deficit
(1) If the deficit exceeds the income and gains for the deficit period referred to in section 388(1), the company may make a claim for the whole or part of the excess (“the claim amount”)—
(a) to be carried back for up to 3 accounting periods ending within the permitted period, and
(b) to be set off against the available profits of the company in those periods in accordance with subsection (2).
(2) The claim amount reduces the company's available profits in the most recent accounting period of the company, before any remainder reduces those in the next most recent accounting period and then those in the next most recent accounting period.
(2A) If any of the claim amount is carried back in accordance with this section to an accounting period, the amount which is so carried back is to be left out of account for the purpose of applying section 93 of FA 2012 in the case of that period.
(3) For the meaning of “available profits”, see section 390.
(4) In this section and that section “permitted period” means the period of 12 months immediately before the deficit period.
(5) A claim under this section must be made—
(a) within the period of 2 years after the end of the deficit period, or
(b) within such further period as an officer of Revenue and Customs allows.
A proposal here is not law. Support on Solon is evidence that people want the change; the official route says what it takes to make it law.