(1) This section applies if—
(a) an amount is charged in respect of employees' remuneration in a company's accounts for a period,
(b) the amount would, apart from this section, be deductible in calculating income from any source for corporation tax purposes, and
(c) the remuneration is not paid before the end of the period of 9 months immediately following the end of the period of account.
(2) If the remuneration is paid after the end of that period of 9 months, the deduction for it is allowed for the period of account in which it is paid.
(3) No deduction is allowed for the remuneration if it is not paid.
(4) Provision corresponding to that made by this section is made by—
(a) section 1249 (in relation to expenses of management of a company's investment business), including as applied by section 82 of FA 2012 ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) For the purposes of section 1288 an amount charged in the accounts in respect of employees' remuneration includes an amount for which provision is made in the accounts with a view to its becoming employees' remuneration.
(2) For the purposes of section 1288 it does not matter whether an amount is charged for—
(a) particular employments, or
(b) employments generally.
(3) If the income is calculated before the end of the 9 month period mentioned in section 1288(1)(c)—
(a) it must be assumed, in making the calculation, that any remuneration which is unpaid when the calculation is made will not be paid before the end of that period, but
(b) if the remuneration is subsequently paid before the end of that period, nothing in this subsection prevents the calculation being revised and any tax return being amended accordingly.
(4) For the purposes of this section and section 1288 remuneration is paid when it—
(a) is treated as received by an employee for the purposes of ITEPA 2003 by section 18 or 19 of that Act (receipt of money and non-money earnings), or
(b) would be so treated if it were not exempt income.
(5) In this section and section 1288—
“employee” includes an office-holder and “employment” therefore includes an office, and
“remuneration” means an amount which is or is treated as earnings for the purposes of Parts 2 to 7 of ITEPA 2003.
(1) This section applies if, in calculating for corporation tax purposes the profits of a company (“the employer”) of a period of account, a deduction would otherwise be allowable for the period in respect of employee benefit contributions made or to be made (but see subsection (4)).
(1A) No deduction is allowed under this section in respect of employee benefit contributions for a period of account which starts more than 5 years after the end of the period of account in which the contributions are made.
(2) No deduction is allowed for the contributions for the period except so far as—
(a) qualifying benefits are provided, or qualifying expenses are paid, out of the contributions during the period or within 9 months from the end of it, or
(b) if the making of the contributions is itself the provision of qualifying benefits, the contributions are made during the period or within 9 months from the end of it.
(2A) Subsection (2) is subject to subsections (1A) and (2B).
(2B) Where subsection (3C) applies, no deduction is allowed for an amount in respect of the contributions for the period except so far as the amount is a qualifying amount (see subsection (3D)).
(3) An amount disallowed under subsection (2) is allowed as a deduction for a subsequent period of account so far as—
(a) qualifying benefits are provided out of the contributions before the end of the subsequent period, or
(b) if the making of the contributions is itself the provision of qualifying benefits, the contributions are made before the end of the subsequent period.
(3A) Subsection (3) is subject to subsections (1A) and (3B).
(3B) Where subsection (3C) applies, an amount disallowed under subsection (2) is allowed as a deduction for a subsequent period only so far as it is a qualifying amount.
(3C) This subsection applies where the provision of qualifying benefits out of, or by way of, the contributions gives rise both to an employment income tax charge and to an NIC charge.
(3D) An amount in respect of employee benefit contributions is a “qualifying amount” if the relevant tax charges are paid before the end of the relevant period (and are not repaid).
(3E) For the purposes of subsection (3D)—
(a) the “relevant tax charges”, in relation to an amount, are the employment income tax charge and the NIC charge arising in respect of benefits which are provided out of, or by way of, that amount, and
(b) the “relevant period” is the period of 12 months immediately following the end of the period of account for which the deduction for the employee benefit contributions would (apart from this section) be allowable.
(3F) For the purposes of subsections (3C) and (3E), “employment income tax charge” and “NIC charge” have the meaning given by section 1292(7).
(3G) Subsection (3H) applies where—
(a) a deduction would, apart from this section, be allowable for an amount (the “remuneration amount”) in respect of employees' remuneration, and
(b) in consequence of the payment of the employees' remuneration, employee benefit contributions are made, or are to be made, in respect of the remuneration amount.
(3H) In calculating for corporation tax purposes the profits of a company, the deduction referred to in subsection (3G)(a) is to be treated as a deduction in respect of employee benefit contributions made or to be made (and is to be treated as not being a deduction in respect of employees' remuneration).
(4) This section does not apply to any deduction that is allowable—
(a) for anything given as consideration for goods or services provided in the course of a trade or profession,
(b) for contributions under a registered pension scheme or under a superannuation fund to which section 615(3) of ICTA applies,
(c) for contributions under a qualifying overseas pension scheme in respect of an individual who is a relevant migrant member of the pension scheme in relation to the contributions,
(d) for contributions under an accident benefit scheme,
(e) under Chapter 1 of Part 11 (share incentive plans),
(f) under section 67 of FA 1989 (qualifying employee share ownership trusts), or
(g) under Part 12 (other relief for employee share acquisitions).
(5) For the purposes of subsection (4)(c) “qualifying overseas pension scheme” and “relevant migrant member” have the same meaning as in Schedule 33 to FA 2004 (see paragraphs 4 to 6 of that Schedule).
(6) See also—
section 1291 (making of “employee benefit contributions”),
section 1292 (provision of qualifying benefits),
section 1293 (timing and amount of certain qualifying benefits),
section 1294 (provision or payment out of employee benefit contributions),
section 1295 (profits calculated before end of 9 month period),
section 1296 (interpretation of sections 1290 to 1296),
section 1297 (some special rules for companies carrying on a life assurance business).
(1) For the purposes of section 1290 an “employee benefit contribution” is made if, as a result of any act or omission—
(a) property is held, or may be used, under an employee benefit scheme, or
(b) there is an increase in the total value of property that is so held or may be so used (or a reduction in any liabilities under an employee benefit scheme).
(2) For this purpose “employee benefit scheme” means a trust, scheme or other arrangement for the benefit of persons who are, or include, present or former employees of the employer or persons linked with present or former employees of the employer.
(3) Section 554Z1 of ITEPA 2003 applies for the purposes of subsection (2) but as if references to A were to a present or former employee of the employer.
(4) So far as it is not covered by subsection (2), “employee benefit scheme” also means—
(a) an arrangement (the “relevant arrangement”) which is—
(i) an arrangement within subsection (1)(b) of section 554A of ITEPA 2003 to which subsection (1)(c) of that section applies, or
(ii) an arrangement within subsection (1)(b) of section 554AA of ITEPA 2003 to which subsection (1)(c) of that section applies, or
(b) any other arrangement connected (directly or indirectly) with the relevant arrangement.
(1) For the purposes of section 1290 qualifying benefits are provided if there is—
(a) a payment of money, or
(b) a transfer of assets,
which meets condition A, B, C or D.
(2) Condition A is that the payment or transfer gives rise both to an employment income tax charge and to an NIC charge.
(3) Condition B is that the payment or transfer would give rise to both charges if—
(a) the duties of the employment in respect of which the payment or transfer was made were performed in the United Kingdom, and
(b) the person in respect of whose employment the payment or transfer was made met at all relevant times the conditions as to residence or presence in Great Britain or Northern Ireland prescribed under section 1(6) of the Contributions and Benefits Act.
(4) Condition C is that the payment or transfer is made in connection with the termination of the recipient's employment with the employer.
(5) Condition D is that the payment or transfer is made under an employer-financed retirement benefits scheme and the payment or transfer—
(a) gives rise to an employment income tax charge under Chapter 2 of Part 6 of ITEPA 2003 or under Part 9 of that Act, or
(b) is an excluded benefit as defined in section 393B(3) of that Act.
(6) None of the conditions is met if the payment or transfer is by way of loan.
(6ZA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6A) For the purposes of section 1290 qualifying benefits are also provided if—
(a) a relevant step within the meaning of Part 7A of ITEPA 2003 is taken, and
(b) Chapter 2 of that Part applies by reason of the step.
(6B) For those purposes qualifying benefits are also provided, where a payment of money is made to a person, if and to the extent that the payment is exempt from income tax by virtue of section 312A of ITEPA 2003.
(7) In this section—
“the Contributions and Benefits Act” means—
the Social Security Contributions and Benefits Act 1992 (c. 4), or
the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7),
“employment income tax charge” means a charge to tax under ITEPA 2003 (whether on the recipient or on someone else), and
“NIC charge” means a liability to pay national insurance contributions under section 6 (Class 1 contributions), section 10 (Class 1A contributions) or section 10A (Class 1B contributions) of the Contributions and Benefits Act.
1293 Timing and amount of certain qualifying benefits
(1) If the provision of a qualifying benefit takes the form of a payment of money, the benefit, so far as Chapter 4 of Part 2 of ITEPA 2003 applies to the money, is provided for the purposes of section 1290 when the money is treated as received for the purposes of that Chapter (applying the rules in section 18 of that Act (receipt of money earnings)).
(1A) Except so far as subsection (1) applies to the provision of the qualifying benefit, if the provision of a qualifying benefit is a chargeable relevant step, for the purposes of section 1290—
(a) the benefit is provided when A's employment with B starts if the chargeable relevant step is taken before then, or
(b) otherwise, the benefit is provided when the chargeable relevant step is taken.
(2) If the provision of a qualifying benefit takes the form of a transfer of an asset which meets condition A, B, C or D in section 1292, the amount provided for the purposes of section 1290 is the total of—
(a) the amount (if any) spent on the asset by a scheme manager, ...
(b) in a case where the asset was transferred to a scheme manager by the employer, the amount of the deduction that would be allowable as mentioned in subsection (1) of that section in respect of the transfer , and
(c) if the transfer is a chargeable relevant step, the cost of the relevant step so far as not covered by paragraph (a) or (b)
(3) But if the amount given by subsection (2) is more than the amount that—
(a) is charged to tax under ITEPA 2003 in respect of the transfer, or
(b) would be so charged if condition B in section 1292 were met,
the deduction allowable under section 1290(2) or (3) is limited to that lower amount.
(4) If the provision of a qualifying benefit is a chargeable relevant step which does not involve a sum of money (see section 554Z(10) of ITEPA 2003) and is not covered by subsection (2), the amount provided for the purposes of section 1290 is the cost of the relevant step (subject to subsection (5)).
(5) If the provision of a qualifying benefit is a chargeable relevant step which is not covered by subsection (2) (whether or not it involves a sum of money), the amount provided for the purposes of section 1290 is not to exceed the amount that—
(a) is charged to tax under ITEPA 2003 in relation to the relevant step (whether under Part 7A of that Act or otherwise), or
(b) would be charged had not A been non-UK resident in any tax year.
(5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) In this section—
(a) “chargeable relevant step” means a relevant step within the meaning of Part 7A of ITEPA 2003 by reason of which Chapter 2 of that Part applies (and references to A and B are to be read accordingly), and
(b) references to the cost of a chargeable relevant step are to be read in accordance with section 554Z3(6) of that Act.
1294 Provision or payment out of employee benefit contributions
(1) For the purposes of section 1290(2)(a)—
(a) any qualifying benefits provided, or
(b) any qualifying expenses paid,
by a scheme manager after the receipt by the scheme manager of employee benefit contributions are treated as being provided or paid out of the contributions.
(2) The rule in subsection (1) operates up to the total amount of the contributions reduced by the amount of any benefits or expenses previously provided or paid as mentioned in section 1290(2)(a).
(3) For the purposes of section 1290(3)(a) any qualifying benefits provided by a scheme manager after the receipt by the scheme manager of employee benefit contributions are treated as being provided out of the contributions.
(4) The rule in subsection (3) operates up to the total amount of the contributions reduced by the amount of any benefits or expenses previously provided or paid as mentioned in section 1290(2)(a) or (3)(a).
(5) For the purposes of this section no account is taken of any other amount received or paid by the scheme manager.
1295 Profits calculated before end of 9 month period
(1) This section applies if the income of the period of account mentioned in section 1290(1) is calculated before the end of the 9 month period mentioned in section 1290(2).
(2) It must be assumed, in making the calculation, that any benefits, expenses or contributions which are not provided, paid or made when the calculation is made will not be provided, paid or made before the end of that period.
(3) But if the benefits, expenses or contributions are subsequently provided, paid or made before the end of that period, nothing in this section prevents the calculation being revised and any tax return being amended accordingly.
(1) In this section and sections 1290 to 1295—
“accident benefit scheme” means an employee benefit scheme under which benefits may be provided only by reason of a person's disablement, or death, caused by an accident occurring during the person's service as an employee of the employer,
“employee benefit contribution” is to be read in accordance with section 1291(1),
“employee benefit scheme” has the meaning given by section 1291(2) to (4),
“the employer” is to be read in accordance with section 1290(1),
“employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see section 393A of that Act) but ignoring section 393B(2)(a) and (c) of that Act,
“qualifying benefits” is to be read in accordance with section 1292,
“qualifying expenses” includes any expenses of a scheme manager (other than the provision of benefits to employees of the employer)—
which are incurred in operating the employee benefit scheme, and
which, if incurred by the employer, would be deductible in calculating for corporation tax purposes the employer's profits of any period of account, and
“scheme manager” means a person who administers an employee benefit scheme (acting in that capacity).
(2) A reference in this section and sections 1290 to 1295 to a company's employee includes the holder of an office under that company, and “employment” is to be read accordingly.
1297 Basic life assurance and general annuity business
(1) This section applies if the employer is a company in relation to which the I - E rules apply.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) For the purpose of calculating the adjusted BLAGAB management expenses of the company for the purposes of section 73 of FA 2012, the employee benefit contributions are treated as expenses debited, in accordance with generally accepted accounting practice, in the accounts drawn up by the company for that period.
(5) For the purposes of sections 1290 to 1296—
(a) any reference to a deduction for employee benefit contributions is to be read as a reference to an amount constituting ordinary BLAGAB management expenses of the company for the purposes of section 76 of FA 2012, and
(b) references to deduction are to be read in that light.
(1) This section applies if a company incurs expenses in providing entertainment or gifts in connection with a business which it carries on.
(2) The general rule is that—
(a) no deduction is allowed for the expenses in calculating income from any source for corporation tax purposes,
(b) no deduction is allowed under section 1219 for the expenses, and
(c) expenses to which this section applies are not to be regarded as constituting ordinary BLAGAB management expenses of the company for the purposes of section 76 of FA 2012.
(3) The general rule prohibits the deduction, or the bringing into account, of expenses which are incurred—
(a) in paying sums to or on behalf of an employee of the company, or
(b) in putting sums at the disposal of an employee of the company,
if (and only if) the sums are paid, or put at the employee's disposal, exclusively for meeting expenses incurred or to be incurred by the employee in providing the entertainment or gift.
(4) The general rule is subject to exceptions—
for entertainment (see section 1299), and
for gifts (see section 1300).
(5) For the purposes of this section and those two sections—
(a) “employee” includes a director of the company and a person engaged in the management of the company,
(b) “entertainment” includes hospitality of any kind, and
(c) the expenses incurred in providing entertainment or a gift include expenses incurred in providing anything incidental to the provision of entertainment or a gift.
(1) The prohibition in section 1298 on deducting, or bringing into account, expenses incurred in providing entertainment does not apply in either of cases A and B.
(2) Case A is where—
(a) the entertainment is of a kind which it is the company's business to provide, and
(b) the entertainment is provided in the ordinary course of the business either for payment or free of charge in order to advertise to the public generally.
(3) Case B is where the entertainment is provided for employees of the company unless—
(a) the entertainment is also provided for others, and
(b) the provision of the entertainment for the employees is incidental to its provision for the others.
(1) The prohibition in section 1298 on deducting, or bringing into account, expenses incurred in providing gifts does not apply in any of cases A, B, C and D.
(2) Case A is where—
(a) the gift is of an item which it is the company's business to provide, and
(b) the item is given away in the ordinary course of the business in order to advertise to the public generally.
(3) Case B is where the gift incorporates a conspicuous advertisement for the company unless—
(a) the gift is food, drink, tobacco or a token or voucher exchangeable for goods, or
(b) the cost of the gift to the company, together with any other gifts (except food, drink, tobacco or a token or voucher exchangeable for goods) given to the same person in the same accounting period, exceeds £50.
The Treasury may by order amend the sum for the time being specified in paragraph (b) so as to increase it.
(4) Case C is where gifts are provided for employees of the company unless—
(a) gifts are also provided for others, and
(b) the provision of the gifts for the employees is incidental to the provision of gifts for the others.
(5) Case D is where the gift is given to—
(a) a charity,
(b) the Historic Buildings and Monuments Commission for England, or
(c) the Trustees of the National Heritage Memorial Fund.
1301 Restriction of deductions for annual payments
(1) In calculating a company's income from any source, no deduction is allowed for an annual payment which meets the conditions in subsections (2) to (6).
(2) The payment must be a payment charged to—
(a) income tax under Part 5 of ITTOIA 2005 otherwise than as relevant foreign income, or
(b) corporation tax under Chapter 7 of Part 10 (annual payments not otherwise charged).
(3) The payment must be made under a liability incurred for consideration in money or money's worth all or any of which—
(a) consists of, or of the right to receive, a dividend, or
(b) is not required to be brought into account in calculating for corporation tax purposes the income of the company making the payment.
(4) The payment must not be a payment of income—
(a) which arises under a settlement made by one party to a marriage or civil partnership by way of provision for the other—
(i) after the dissolution or annulment of the marriage or civil partnership, or
(ii) while they are separated under an order of a court, or under a separation agreement, or if the separation is likely to be permanent, and
(b) which is payable to, or applicable for the benefit of, the other party.
(5) The payment must not be made to an individual under a liability incurred at any time in consideration of the individual surrendering, assigning or releasing an interest in settled property to or in favour of a person with a subsequent interest.
(6) The payment must not be a payment of an annuity granted in the ordinary course of a business of granting annuities.
(7) In subsection (2) “relevant foreign income” has the same meaning as in the Income Tax Acts (see section 989 of ITA 2007).
(8) In the application of this section to Scotland the reference in subsection (5) to settled property is to be read as a reference to property held in trust.
In calculating a company's income from any source for corporation tax purposes, no deduction is allowed for interest otherwise than under Part 5 (loan relationships).
(1) No deduction is allowed for corporation tax purposes for any contribution paid by any person under—
(a) Part 1 of the Social Security Contributions and Benefits Act 1992 (c. 4), or
(b) Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7).
(2) But this prohibition does not apply to an employer's contribution.
(3) For this purpose “an employer's contribution” means—
(a) a secondary Class 1 contribution,
(b) a Class 1A contribution, or
(c) a Class 1B contribution,
within the meaning of Part 1 of the Social Security Contributions and Benefits Act 1992 or of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.
(4) Subsection (1) does not apply to the calculation of income from the holding of an office (in relation to which section 969 applies income tax principles, those including section 360A of ITEPA 2003 which corresponds to this section).
1303 Penalties, interest and VAT surcharges and interest
(1) In calculating profits for any corporation tax purpose, no deduction is allowed for any penalty or interest mentioned in the first column of the following table.
(2) This is the table—
Penalty or interest | Description of tax, levy or duty
Penalty under any of sections 60 to 70 of VATA 1994 | Value added tax
Interest under section 101 of FA 2009 in respect of an amount of value added tax
Penalty under any of sections 8 to 11 of FA 1994 | Excise duties
Penalty under any of paragraphs 12 to 19 of Schedule 7 to FA 1994 | Insurance premium tax
Interest under paragraph 21 of that Schedule
Penalty under any provision of Part 5 of Schedule 5 to FA 1996 | Landfill tax
Interest under paragraph 26 or 27 of that Schedule
Penalty under any provision of Schedule 6 to FA 2000 | Climate change levy
Interest under any of paragraphs 70, 81 to 85 and 109 of that Schedule
Penalty under any provision of Part 2 of FA 2001 | Aggregates levy
Interest under any of paragraphs 5 to 9 of Schedule 5 to, paragraph 6 of Schedule 8 to and paragraph 5 of Schedule 10 to FA 2001
Penalty under section 25 or 26 of FA 2003 | Customs duties
Penalty under any provision of Part 4 of FA 2003 | Stamp duty land tax
Interest under any provision of that Part
Interest under section 101 of FA 2009 in connection with sums required to be deducted under section 61 of FA 2004 (construction industry)
Penalty under Schedule 24 to FA 2007 | Various taxes and excise duties
Penalty under Schedule 41 to FA 2008 | Various taxes and excise duties
Penalty under Schedule 16 to F(No. 2)A 2017 | Various taxes
(3) In calculating profits for any corporation tax purpose, no deduction is allowed for any surcharge under section 59 of VATA 1994.
(1) In calculating income from any source for corporation tax purposes, no deduction is allowed for any expenses to which subsection (4) or (5) applies.
(2) No deduction is allowed under section 1219 (expenses of management of a company's investment business) for any expenses to which subsection (4) or (5) applies.
(3) Expenses to which subsection (4) or (5) applies are not to be regarded as constituting ordinary BLAGAB management expenses of a company for the purposes of section 76 of FA 2012.
(4) This subsection applies to expenses incurred—
(a) in making a payment if the making of the payment constitutes a criminal offence, or
(b) in making a payment outside the United Kingdom if the making of a corresponding payment in any part of the United Kingdom would constitute a criminal offence in that part.
(5) This subsection applies to expenses incurred in making a payment induced by a demand which constitutes—
(a) the offence of blackmail under section 21 of the Theft Act 1968 (c. 60) (England and Wales),
(b) the offence of extortion (Scotland), or
(c) the offence of blackmail under section 20 of the Theft Act (Northern Ireland) 1969 (c. 16 (N.I.)) (Northern Ireland).
(1) In the calculation of a company's profits for corporation tax purposes, no deduction is allowed in respect of a dividend or other distribution.
(2) Subsection (1) is subject to any provision of the Corporation Tax Acts expressly authorising a deduction.
(3) In this section “profits” has the same meaning as in Part 2.
1305A Avoidance schemes involving the transfer of corporate profits
(1) This section applies if—
(a) two companies (“A” and “B”) are party to any arrangements (whether or not at the same time),
(b) A and B are members of the same group,
(c) the arrangements result in what is, in substance, a payment (directly or indirectly) from A to B of all or a significant part of the profits of the business of A or of a company which is a member of the same group as A or B (or both) (“the profit transfer”), and
(d) the main purpose or one of the main purposes of the arrangements is to secure a tax advantage for any person involving the profit transfer (whether by circumventing section 695A (disguised distribution arrangements: derivative contracts) or otherwise).
(2) A's profits are to be calculated for corporation tax purposes as if the profit transfer had not occurred.
(3) Accordingly—
(a) if (apart from this section) an amount relating to the profit transfer would be brought into account by A as a deduction in that calculation, no deduction is allowed in respect of that amount, and
(b) A's profits are to be increased by so much of the amount of the profit transfer as is not an amount to which paragraph (a) applies (whether or not the profits transferred would be A's profits apart from the arrangements).
(4) For the purposes of this section a company is a member of the same group as another company if it is (or has been) a member of the same group at a time when the arrangements mentioned in subsection (1) have effect.
(5) Where in relation to arrangements involving one or more derivative contracts the requirements of section 695A(1)(a) to (e) are met, nothing in this section applies in relation to any debit in respect of any of those contracts.
(6) In this section—
“arrangements” includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions;
“group” has the meaning given by section 357GD of CTA 2010;
“tax advantage” has the meaning given by section 1139 of CTA 2010.
1305B Avoidance schemes involving certain non-derecognition liabilities
(1) This section applies if—
(a) assets (“the underlying assets”) are transferred to a relevant entity,
(b) for accounting purposes following the transfer—
(i) the underlying assets continue to be recognised to any extent by a member of the transferor group, and
(ii) a liability is also recognised by a member of the transferor group in connection with the underlying assets or otherwise in connection with the transfer,
(c) in calculating a company’s profits for corporation tax purposes a deduction would (ignoring this section) be allowed for a loss, expense or debit in connection with the liability mentioned in paragraph (b)(ii), and
(d) the loss, expense or debit arises, to any extent, as a result of arrangements (whether or not they are or include the transfer mentioned in paragraph (a)) where the main purpose, or one of the main purposes, of any party to the arrangements in being a party to them is to secure a tax advantage for any person.
(2) The deduction mentioned in subsection (1)(c) is not allowed so far as it is attributable on a just and reasonable apportionment to the purpose mentioned in subsection (1)(d).
(3) For the purposes of the condition in subsection (1)(b) it does not matter whether the assets recognised as mentioned in subsection (1)(b)(i) and the liability recognised as mentioned in subsection (1)(b)(ii)—
(a) are recognised immediately after the transfer or only later;
(b) are first recognised at the same time or at different times;
(c) are recognised by the same member of the transferor group as they were before the transfer.
(4) For the purposes of subsection (1) the circumstances in which assets are “transferred” to a relevant entity include circumstances in which—
(a) a right to income deriving from the assets is transferred to the relevant entity;
(b) a contract is entered into to pay the relevant entity income deriving from the assets;
(c) the assets, or income deriving from them, come to be held in trust for the benefit of the relevant entity.
(5) In this section—
“arrangements” includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions;
“member of the transferor group” means any of the following—
the person who transferred the underlying assets as mentioned in subsection (1)(a);
a company that is connected with the person mentioned in paragraph (a) and is not the relevant entity mentioned in subsection (1)(a);
a transparent entity in which the person mentioned in paragraph (a) or a company falling within paragraph (b) has an interest;
“relevant entity” means—
a securitisation company within the meaning of Chapter 4 of Part 13 of CTA 2010, or
any person that is a party to the same capital market arrangement (within the meaning of paragraph 1 of Schedule 2A to the Insolvency Act 1986) as such a company;
“transparent entity” means anything that—
may be treated as an entity for accounting purposes, and
is not chargeable to corporation tax or income tax as a person (ignoring any exemptions).
(6) The following apply for the purposes of this section—
section 1122 of CTA 2010 (“connected” persons)
section 1139 of CTA 2010 (“tax advantage”).
1306 Losses calculated on same basis as miscellaneous income
(1) The same rules apply for corporation tax purposes in calculating a company's miscellaneous losses as apply in calculating corresponding miscellaneous income.
(2) This is subject to any express provision to the contrary.
(3) In this section—
(a) “miscellaneous income” means profits or other income of the company charged to corporation tax under or by virtue of a provision to which section 1173 of CTA 2010 applies, and
(b) “miscellaneous losses” means losses in transactions in respect of which the company is within the charge to corporation tax under or by virtue of such a provision.
(4) Provision corresponding to that made by this section is made by—
(a) section 47 (in relation to trades), and
(b) section 210 (in relation to property businesses).
1307 Apportionment etc of miscellaneous profits and losses to accounting period
(1) This section applies if—
(a) income is chargeable to corporation tax under or by virtue of any provision to which section 1173 of CTA 2010 applies, and
(b) any period for which accounts are drawn up (a “period of account”) does not coincide with an accounting period.
(2) For this purpose the reference to any provision to which section 1173 of CTA 2010 applies is to be read as if subsection (3) of that section were omitted (exclusion of Chapter 8 of Part 10 so far as relating to income which arises from a source outside the United Kingdom).
(3) Any of the following steps may be taken if they are necessary in order to arrive at the profits or losses of the accounting period—
(a) apportioning the profits or losses of a period of account to the parts of that period falling in different accounting periods, and
(b) adding the profits or losses of a period of account (or part of a period) to profits or losses of other periods of account (or parts).
(4) The steps must be taken by reference to the number of days in the periods concerned.
1308 Expenditure brought into account in determining value of intangible asset
(1) Subsection (2) applies if a company—
(a) incurs expenditure on research and development which is not of a capital nature, and
(b) brings the expenditure into account in determining the value of an intangible asset.
(2) The expenditure is not prevented from being allowed as a deduction in calculating for corporation tax purposes the company's profits, just because it is brought into account as mentioned in subsection (1)(b).
(3) Subsection (2) applies, in particular, for the purposes of—
(a) section 87 (expenses of research and development), and
(b) Part 13.
(4) Subsection (5) applies if, in accordance with subsection (2), expenditure is both—
(a) brought into account in determining the value of an intangible asset, and
(b) allowed as a deduction in calculating profits.
(5) No deduction may be made in calculating for corporation tax purposes the profits of the company in respect of the writing down of so much of the value of the intangible asset as is attributable to the expenditure.
(6) Subsection (2) does not allow expenditure as a deduction in calculating a company's profits for an accounting period so far as—
(a) a deduction has been made in respect of it in calculating the company's profits for a previous accounting period, or
(b) the company has benefited from a tax relief in respect of it for a previous accounting period under Part 13.
(7) In this section—
“intangible asset” has the meaning it has for accounting purposes, and
“research and development” has the meaning given by section 1138 of CTA 2010.
1309 Payments treated as made to visiting performers
(1) This section applies if a payment or transfer made to a company within the charge to corporation tax is treated under section 13(5) of ITTOIA 2005 as made instead to the performer.
(2) The company is treated for corporation tax purposes as if the payment or transfer had not been made to it.
(3) Subsection (2) does not apply in such circumstances as may be prescribed by regulations.
(4) Regulations—
(a) may provide that any liability to corporation tax which would apart from subsection (2) arise in relation to the payment or transfer is not to arise (or is to arise so far as prescribed),
(b) may make provision generally for giving effect to subsection (2), and
(c) may make different provision for different cases or descriptions of cases.
(5) In this section—
“payment” and “transfer” have the same meaning as in section 13 of ITTOIA 2005,
“regulations” means regulations made by the Treasury.
(1) Any power of the Treasury or the Commissioners for Her Majesty's Revenue and Customs to make any order or regulations under this Act is exercisable by statutory instrument.
(2) Any statutory instrument containing any order or regulations made by the Treasury or the Commissioners for Her Majesty's Revenue and Customs under this Act is subject to annulment in pursuance of a resolution of the House of Commons.
(3) Subsection (2) does not apply if the order or regulations are made under—
(a) section 86 (meaning of “urban regeneration company”),
(b) section 1325(2) (power to make transitional or saving provision in connection with the coming into force of this Act),
(c) section 1329(3) (power to appoint a day for the commencement of certain provisions of this Act),
(d) paragraph 42 of Schedule 2 (lease premiums: time limits for claims for repayment of tax), or
(e) any of the provisions mentioned in subsection (4) (which provides for affirmative resolution procedure).
(4) An order or regulations made under—
(zzza) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(zza) section 465A or 701A (powers to make regulations where accounting standards change),
(za) section 931C (meaning of “qualifying territory”),
(zb) section 1126B (provision about when expenditure on consumable items is attributable to relevant research and development),
(zc) section 1142(1)(e) (companies ineligible for R&D relief),
(a) section 1183(3) (meaning of “film-making activities” etc),
(b) section 1185(3) (meaning of “UK expenditure” etc),
(c) section 1198(2) (UK expenditure),
(d) section 1199(4) (additional deduction for qualifying expenditure),
(e) section 1200(4) (amount of additional deduction), ...
(ea) section 1216AF(3) (meaning of “television production activities” etc),
(eb) section 1216AH(3) (meaning of “UK expenditure” etc),
(ec) section 1216CE(2) (UK expenditure),
(ed) section 1216CF(4) (additional deduction for qualifying expenditure),
(ee) section 1216CG(3) (amount of additional deduction),
(ef) section 1217AC(2) (meaning of “video games development activities” etc),
(eg) section 1217AE(3) (meaning of “UK expenditure” etc),
(eh) section 1217CE(2) (UK expenditure),
(ei) section 1217CF(4) (additional deduction for qualifying expenditure),
(ej) section 1217CG(3) (amount of additional deduction),
(ek) section 1217GB(4) (EEA expenditure condition),
(el) section 1217J(4) (amount of additional deduction),
(em) section 1217O (activities involved in developing, producing, running or closing a production),
(en) section 1217RB (EEA expenditure condition),
(eo) section 1217RE (amount of additional deduction),
(ep) section 1218ZCC (EEA expenditure condition),
(eq) section 1218ZCF (amount of additional deduction),
(er) section 1218ZF (regulations about activities in relation to exhibition),
(f) paragraph 130 of Schedule 2 (application of Part 15 etc to films not completed before 1 January 2007),
may only be made if a draft of the instrument containing the order or regulations has been laid before and approved by resolution of the House of Commons.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In this Act—
“CAA 2001” means the Capital Allowances Act 2001 (c. 2),
“CTA 2010” means the Corporation Tax Act 2010,
“FA”, followed by a year, means the Finance Act of that year,
“F(No.2)A”, followed by a year, means the Finance (No.2) Act of that year,
“FISMA 2000” means the Financial Services and Markets Act 2000 (c. 8),
“ICTA” means the Income and Corporation Taxes Act 1988 (c. 1),
“IHTA 1984” means the Inheritance Tax Act 1984 (c. 51),
“ITA 2007” means the Income Tax Act 2007 (c. 3),
“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003 (c. 1),
“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005 (c. 5),
“TCGA 1992” means the Taxation of Chargeable Gains Act 1992 (c. 12),
“TIOPA 2010” means the Taxation (International and Other Provisions) Act 2010,
“TMA 1970” means the Taxes Management Act 1970 (c. 9), and
“VATA 1994” means the Value Added Tax Act 1994 (c. 23).
(1) Any profits—
(a) from exploration or exploitation activities carried on in the UK sector of the continental shelf, or
(b) from exploration or exploitation rights,
are treated for corporation tax purposes as profits from activities or property in the United Kingdom.
(2) Any profits arising to a non-UK resident company—
(a) from exploration or exploitation activities, or
(b) from exploration or exploitation rights,
are treated for corporation tax purposes as profits of a trade carried on by the company in the United Kingdom through a permanent establishment in the United Kingdom.
(3) In this section—
“exploration or exploitation activities” means activities carried on in connection with the exploration or exploitation of so much of the seabed and subsoil and their natural resources as is situated in the United Kingdom or the UK sector of the continental shelf,
“exploration or exploitation rights” means rights to assets to be produced by exploration or exploitation activities or to interests in or to the benefit of such assets, and
“the UK sector of the continental shelf” means the areas designated by Order in Council under section 1(7) of the Continental Shelf Act 1964 (c. 29).
(1) In this Act “caravan” means—
(a) a structure designed or adapted for human habitation which is capable of being moved by being towed or being transported on a motor vehicle or trailer, or
(b) a motor vehicle designed or adapted for human habitation,
but does not include railway rolling stock which is on rails forming part of a railway system or any tent.
(2) A structure composed of two sections—
(a) separately constructed, and
(b) designed to be assembled on a site by means of bolts, clamps or other devices,
is not prevented from being a caravan just because it cannot, when assembled, be lawfully moved on a highway (or, in Scotland or Northern Ireland, road) by being towed or being transported on a motor vehicle or trailer.
(1) Section 1122 of CTA 2010 (how to tell whether persons are connected) applies for the purposes of this Act unless otherwise indicated (whether expressly or by implication).
(2) Section 1124 of CTA 2010 (meaning of control in relation to a body corporate) applies for the purposes of this Act unless otherwise indicated (whether expressly or by implication).
In this Act, except where the context otherwise requires—
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“credit union” means a society registered as a credit union under the Co-operative and Community Benefit Societies Act 2014 or the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)),
“dividend ordinary rate” means the rate of income tax specified in section 8(1) of ITA 2007,
“houseboat” means a boat or similar structure designed or adapted for use as a place of human habitation,
“the Mergers Directive” means Council Directive 2009/133/EC,
“national insurance contributions” means any contributions under—
Part 1 of the Social Security Contributions and Benefits Act 1992 (c. 4), or
Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7),
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“normal self-assessment filing date”, in relation to a tax year, means the 31 January following the tax year,
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“SCE” means a European Cooperative Society within the meaning of Council Regulation (EC) No. 1435/2003 on the Statute for a European Cooperative Society,
“SE” means a European public limited-liability company (or Societas Europaea) within the meaning of Council Regulation (EC) No. 2157/2001 on the Statute for a European company,
“statutory insolvency arrangement” means—
a voluntary arrangement that has taken effect under, or as a result of, the Insolvency Act 1986, the Insolvency (Northern Ireland) Order 1989 or schedule 4 to the Bankruptcy (Scotland) Act 2016,
a compromise or arrangement that has taken effect under Part 26 or 26A of the Companies Act 2006, or
an arrangement or compromise of a kind corresponding to any of those mentioned in paragraph (a) or (b) that has taken effect under, or as a result of, the law of a country or territory outside the United Kingdom,
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(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) In the application of section 1284 (housing grants) and Part 1 of Schedule 2 (transitionals and savings: general provisions) to Scotland, “enactment” includes an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament.
In the application of section 1284 (housing grants) and Part 1 of Schedule 2 (transitionals and savings: general provisions) to Northern Ireland, “enactment” includes an enactment comprised in, or in an instrument made under, Northern Ireland legislation.
(1) The Treasury may by order make provision in consequence of this Act.
(2) The power conferred by subsection (1) may not be exercised after 31 March 2012.
(3) An order under this section may amend, repeal or revoke any provision made by or under an Act.
(4) An order under this section may contain provision having retrospective effect.
(5) An order under this section may contain incidental, supplemental, consequential and transitional provision and savings.
(6) In subsection (3) “Act” includes an Act of the Scottish Parliament and Northern Ireland legislation.