(1) This section applies if—
(a) a company (“the trader”) carries on a trade on some or all of the land to which a wayleave relates,
(b) rent is receivable, or expenses are incurred, by the trader in respect of the wayleave, and
(c) apart from any rent or expenses in respect of a wayleave, no other receipts or expenses in respect of any of the land are brought into account in calculating the profits of any property business of the trader.
(2) If—
(a) the trader would otherwise be liable to tax under Chapter 8 of Part 4 in respect of the rent for the wayleave (rent receivable for UK electric-line wayleaves), or
(b) expenses incurred by the trader in respect of the wayleave would otherwise be brought into account in calculating profits charged under that Chapter,
the trader may instead bring both the rent and the expenses into account in calculating the profits of the trade.
(3) If—
(a) rent for the wayleave would otherwise be brought into account in calculating the profits of a property business of the trader, or
(b) expenses incurred by the trader in respect of the wayleave would otherwise be so brought into account,
the trader may instead bring both the rent and the expenses into account in calculating the profits of the trade.
(4) In this section “rent” includes—
(a) a receipt mentioned in section 207(3), and
(b) any other receipt in the nature of rent.
(5) In this section “wayleave” means an easement, servitude or right in or over land which is enjoyed in connection with—
(a) an electric, telegraph or telephone wire or cable,
(b) a pipe for the conveyance of any thing, or
(c) any apparatus used in connection with such a pipe.
(6) The reference to the enjoyment of an easement, servitude or right in connection with an electric, telegraph or telephone wire or cable includes (in particular) its enjoyment in connection with—
(a) a pole or pylon supporting such a wire or cable, or
(b) apparatus used in connection with such a wire or cable.
(1) The profits of a trade must be calculated in accordance with generally accepted accounting practice, subject to any adjustment required or authorised by law in calculating profits for corporation tax purposes.
(2) This does not—
(a) require a company to comply with the requirements of the Companies Act 2006 (c. 46) or subordinate legislation made under that Act except as to the basis of calculation, or
(b) impose any requirements as to audit or disclosure.
(3) This section does not affect any provisions of the Corporation Tax Acts—
(a) relating to the calculation of the profits of—
(i) Lloyd's underwriters, ...
(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) otherwise laying down special rules for the calculation of the profits of a particular description of business.
(1) The same rules apply for corporation tax purposes in calculating losses of a trade as apply in calculating profits.
(2) This is subject to any express provision to the contrary.
(1) In the Corporation Tax Acts, in the context of the calculation of the profits of a trade, references to receipts and expenses are to any items brought into account as credits or debits in calculating the profits.
(2) It follows that references in that context to receipts or expenses do not imply that an amount has actually been received or paid.
(3) This section is subject to any express provision to the contrary.
The rules for calculating the profits of a trade need to be read with—
(a) the provisions of CAA 2001 which treat allowances as expenses of a trade,
(b) the provisions of CAA 2001 which treat charges as receipts of a trade,
(c) section 297 (credits and debits in respect of a loan relationship to which a company is a party for the purposes of a trade it carries on treated as receipts and expenses of the trade),
(d) section 573 (credits and debits in respect of a derivative contract to which a company is a party for the purposes of a trade it carries on treated as receipts and expenses of the trade),
(e) section 747 (credits and debits in respect of an intangible fixed asset held by a company for the purposes of a trade it carries on treated as receipts and expenses of the trade), and
(f) section 749 (credits and debits in respect of an intangible fixed asset held by a company for the purposes of a section 39(4) concern which it carries on treated as receipts and expenses of the concern).
(1) Subsection (2) applies—
(a) for the purpose of bringing into account an amount arising in respect of a transaction involving money's worth entered into in the course of a trade, and
(b) if an amount at least equal to the amount that would be brought into account under that subsection is not otherwise brought into account as a receipt in calculating the profits of a trade under a provision of this Part other than a provision mentioned in subsection (3).
(2) For the purpose of calculating the profits of the trade, an amount equal to the value of the money's worth is brought into account as a receipt if, had the transaction involved money, an amount would have been brought into account as a receipt in respect of it.
(3) But where another provision of this Part makes express provision for the bringing into account of an amount in respect of money's worth as a receipt in calculating the profits of a trade (however expressed), that other provision applies instead of subsection (2).
(1) Animals or other living creatures kept for the purposes of a trade are treated as trading stock if they are not kept wholly or mainly—
(a) for the work they do in connection with the carrying on of the trade,
(b) for public exhibition, or
(c) for racing or other competitive purposes.
(2) But they are not treated as trading stock if they are part of a herd in relation to which a herd basis election has effect (see Chapter 8).
(3) This section applies to shares in animals or other living creatures as it applies to the creatures themselves.
51 Relationship between rules prohibiting and allowing deductions
(1) Any relevant permissive rule in this Part—
(a) has priority over any relevant prohibitive rule, but
(b) is subject to—
(i) section 56 (car ... hire),
(ii) section 1288 (unpaid remuneration),
(iii) section 1290 (employee benefit contributions),
(iv) section 1304 (crime-related payments).
(1A) But, if the relevant permissive rule would allow a deduction in calculating the profits of a trade in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—
(a) does not have priority under subsection (1)(a), and
(b) is subject to any relevant prohibitive rule (and to the provisions mentioned in subsection (1)(b)).
(2) In this section “any relevant permissive rule in this Part” means any provision of—
(a) Chapter 5 (trade profits: rules allowing deductions), apart from sections 62 to 67,
(b) Chapter 7 (trade profits: gifts to charities etc),
(c) Chapter 9 (trade profits: other specific trades), or
(d) Chapter 12 (deductions from profits: unremittable amounts),
which allows a deduction in calculating the profits of a trade.
(3) In this section “any relevant prohibitive rule”, in relation to any deduction, means any provision of this Part or Chapter 1 of Part 20 (apart from those mentioned in subsection (1)(b)) which might otherwise be read as—
(a) prohibiting or deferring the deduction, or
(b) restricting the amount of the deduction.
(4) In this section “relevant tax avoidance arrangements” means arrangements—
(a) to which the company carrying on the trade is a party, and
(b) the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).
“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
52 Apportionment etc of profits and losses to accounting period
(1) This section applies if a period of account of a trade does not coincide with an accounting period.
(2) 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).
(3) The steps must be taken by reference to the number of days in the periods concerned.
(1) In calculating the profits of a trade, no deduction is allowed for items of a capital nature.
(2) Subsection (1) is subject to provision to the contrary in the Corporation Tax Acts.
54 Expenses not wholly and exclusively for trade and unconnected losses
(1) In calculating the profits of a trade, no deduction is allowed for—
(a) expenses not incurred wholly and exclusively for the purposes of the trade, or
(b) losses not connected with or arising out of the trade.
(2) If an expense is incurred for more than one purpose, this section does not prohibit a deduction for any identifiable part or identifiable proportion of the expense which is incurred wholly and exclusively for the purposes of the trade.
(1) This section applies to non-money debts to which neither Part 7 (derivative contracts) nor Part 8 (intangible fixed assets) applies.
(2) In calculating the profits of a company's trade, no deduction is allowed in respect of a non-money debt owed to the company, except—
(a) by way of impairment loss, or
(b) so far as the debt is released wholly and exclusively for the purposes of the trade as part of a statutory insolvency arrangement.
(3) In this section “non-money debt” means a debt which is not a money debt for the purposes of Part 5 (loan relationships).
(1) Subsection (2) applies if, in calculating the profits of a trade, a deduction is allowed for expenses incurred on the hiring of a car which is not——
(a) a car that is first registered before 1 March 2001,
(b) a car that has low CO 2 emissions,
(c) a car that is electrically propelled, or
(d) a qualifying hire car.
(2) The amount of the deduction which would otherwise be allowable is reduced by 15%.
(3) Subsection (4) applies if a deduction is reduced as a result of subsection (2), or a corresponding provision, and subsequently—
(a) there is a rebate (however described) of the hire charges, or
(b) a debt in respect of any of the hire charges is released otherwise than as part of a statutory insolvency arrangement.
(4) The amount that, as a result of the rebate or release—
(a) is brought into account as a receipt of the trade, or
(b) is treated as a post-cessation receipt under section 193 (debts released after cessation),
is reduced by 15%.
(5) In this section “corresponding provision” means—
(a) section 1251(2) (car ... hire: expenses of management), including as applied by section 82(4) of FA 2012, or
(b) section 48(2) of ITTOIA 2005 (car ... hire: trade profits and property income), ...
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) In section 56 “car ...” means a mechanically propelled road vehicle other than ...—
(za) a motor cycle (within the meaning of section 185(1) of the Road Traffic Act 1988),
(a) a vehicle of a construction primarily suited for the conveyance of goods or burden of any description, or
(b) a vehicle of a type not commonly used as a private vehicle and unsuitable for such use.
(1A) In section 56—
“ a car that has low CO2 emissions ” has the same meaning as in section 104AA of CAA 2001 (special rate expenditure: main rate car);
“ electrically propelled ” has the meaning given in section 268B of that Act.
(2) In section 56 “a qualifying hire car ...” means a car ... which—
(a) is hired under a hire-purchase agreement ... under which there is no option to purchase,
(b) is hired under a hire-purchase agreement under which there is an option to purchase exercisable on the payment of a sum equal to not more than 1% of the retail price of the car ... when new, or
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) is leased under a long-funding lease (within the meaning of section 70G of CAA 2001).
(3) For this purpose “hire-purchase agreement” has the meaning given by section 1129 of CTA 2010.
(6) In this section ... “new” means unused and not second-hand.
(1) Section 56 does not apply to expenses incurred by a company (“the taxpayer”) on the hiring of a car if condition A or B is met.
(2) Condition A is that—
(a) the expenses are incurred in respect of the making available of the car to the taxpayer for a period (“the hire period”) of not more than 45 consecutive days, and
(b) if the car is made available to the taxpayer (whether by the same person or different persons) for one or more periods linked to the hire period, the hire period and the linked period or periods, taken together, consist of not more than 45 days.
(3) Condition B is that the expenses are incurred in respect of a period (“the sub-hire period”) throughout which the taxpayer makes the car available to another person (“ the customer ”) and—
(a) the sub-hire period consists of more than 45 consecutive days, or
(b) if the taxpayer makes the car available to the customer throughout one or more periods linked to the sub-hire period, the sub-hire period and the linked period or periods, taken together, consist of more than 45 days,
but see subsection (4).
(4) Condition B is not met if—
(a) the customer is an employee or officer of the taxpayer or of a person connected with the taxpayer, or
(b) during all or part of the sub-hire period (or any period linked to the sub-hire period), the customer makes any car available to an employee or officer of the taxpayer under arrangements with the taxpayer or with a person connected with the taxpayer.
(5) Neither condition A nor condition B is met if the car is hired under arrangements the purpose, or one of the main purposes, of which is—
(a) to disapply or reduce the effect of section 56, or
(b) other avoidance of tax.
(6) For the purposes of condition B the expenses incurred by the taxpayer on the hiring of the car must be apportioned between—
(a) the sub-hire period, and
(b) the remainder of the period during which the car is made available to the taxpayer,
according to the respective lengths of those periods.
(7) A period of consecutive days (“the main period”) is linked to—
(a) a period of consecutive days that ends not more than 14 days before the main period begins,
(b) a period of consecutive days that begins not more than 14 days after the main period ends, and
(c) a period of consecutive days linked to a period in paragraph (a) or (b).
(8) For the purposes of this section, where arrangements for the hiring of a car include arrangements for the provision of a replacement car in the event that the first car is not available, the first car and any replacement car are to be treated as if they were the same car.
(9) In this section (and section 58B) “ arrangements ” includes any arrangements, scheme or understanding of any kind, whether or not legally enforceable and whether involving a single transaction or two or more transactions.
(1) This section applies where connected persons incur expenses on the hiring of the same car for the same period and—
(a) section 56 would (but for this section) apply to the expenses of two or more of those persons, or
(b) section 56 and section 48 of ITTOIA 2005 would (but for this section and section 50B of that Act) each apply to the expenses of at least one of those persons.
(2) This section only applies where one or more of the persons mentioned in subsection (1)(a) or (b) incurs the expenses under commercial arrangements (and such a person is referred to below as a “commercial lessee”).
(3) In relation to the expenses mentioned in subsection (1) to which section 56 would (but for this section) apply, section 56 only applies to the following—
(a) where there is one commercial lessee, any such expenses incurred by that lessee, and
(b) where there is more than one, any such expenses incurred by the first commercial lessee in the chain of arrangements for the hiring of the car for the period.
(4) In this section—
(a) references to expenses incurred by a commercial lessee include expenses incurred in that or any other capacity, and
(b) “ commercial arrangements ” means arrangements the terms of which are such as would reasonably have been expected if the parties to the arrangements had been dealing at arm's length.
Section 33A(3) of CAA 2001 provides that no deduction is allowed in respect of certain expenditure on an integral feature of a building or structure (within the meaning of that section).
(1) Where plant or machinery (“the asset”) is leased and a rental rebate is payable by the lessor, the amount of the deduction allowable in respect of the rebate is limited to—
(a) the amount of the lessor's income from the lease, or
(b) in the case of a finance lease, that amount excluding the finance charge.
(2) “Rental rebate” means any sum payable to the lessee that is calculated by reference to the termination value of the asset.
(3) For this purpose—
(a) the termination value of an asset is the value of the asset at or about the time when the lease terminates,
(b) calculation by reference to the termination value includes calculation by reference to any one or more of—
(i) the proceeds of sale, if the asset is sold,
(ii) any insurance proceeds, compensation or similar sums in respect of the asset, and
(iii) an estimate of the market value of the asset, and
(c) calculation by reference to the termination value also includes—
(i) determination in a way which, or by reference to factors or criteria which, might reasonably be expected to produce a broadly similar result to calculation by reference to the termination value, or
(ii) any other form of calculation indirectly by reference to the termination value.
(4) For the purposes of this section—
(a) the income of the lessor from the lease is the total of all the amounts receivable in connection with the lease that have been brought into account in calculating the lessor's income for corporation tax purposes, excluding—
(i) disposal receipts brought into account under Part 2 of CAA 2001 (see section 60(1) of that Act), and
(ii) so much of any amount as represents charges for services or qualifying UK or foreign tax (within the meaning of section 70YE of that Act) to be paid by the lessor, and
(b) the finance charge, in relation to a finance lease, is—
(i) if the lease is one that, under generally accepted accounting practice, falls (or would fall) to be treated as a loan, so much of the rentals under the lease as fall (or would fall) to be treated as interest, or
(ii) in any other case, the amount that, in accordance with generally accepted accounting practice, falls (or would fall) to be treated as the gross return on investment.
(5) Where the asset is acquired by the lessor in a transaction—
(a) to which section 948 of CTA 2010 applies (modified application of CAA 2001 in case of transfer of trade without change of ownership), or
(b) in relation to which an election is made under section 266 of CAA 2001 (election where predecessor and successor are connected persons),
this section applies as if the successor had been the lessor at all material times and everything done to or by the predecessor had been done to or by the successor.
(6) Where the whole or part of a rental rebate is disallowed under this section as a deduction in computing profits—
(a) the amount disallowed, or
(b) if less, the amount by which the rental rebate exceeds the amount of capital expenditure incurred by the lessor,
may be treated for the purposes of corporation tax in respect of chargeable gains as an allowable loss accruing to the lessor on the termination of the lease.
That allowable loss is deductible only from chargeable gains accruing to the lessor on the disposal of the asset.
(7) This section does not apply to a long funding finance lease (see section 362 of CTA 2010).
(1) This section applies if a company incurs expenses for the purposes of a trade before (but not more than 7 years before) the date on which the company starts to carry on the trade (“the start date”).
(2) If, in calculating the profits of the trade—
(a) no deduction would otherwise be allowed for the expenses, but
(b) a deduction would be allowed for them if they were incurred on the start date,
the expenses are treated as if they were incurred on the start date (and therefore a deduction is allowed for them).
(3) This section does not apply to any expenses in relation to which—
(a) any debit falls, or
(b) any debit would fall but for section 330 (loan relationships: debits in respect of pre-trading expenditure),
to be brought into account for the purposes of Part 5 (loan relationships).
(1) Sections 63 to 67 apply if land used in connection with a trade is subject to a taxed lease.
(2) Section 63 (tenants occupying land for purposes of trade treated as incurring expenses) applies in calculating the profits of a trade carried on by the tenant under the taxed lease for the purpose of making deductions for the expenses of the trade.
(3) But any deduction for an expense under section 63 is subject to the application of any provision of Chapter 4 of this Part.
(4) In this section and sections 63 to 67 the following expressions have the same meaning as in Chapter 4 of Part 4 (profits of property businesses: lease premiums etc)—
“receipt period” (see section 228(6)),
“taxed lease” (see section 227(4)),
“taxed receipt” (see section 227(4)), and
“unreduced amount” (see section 230(2)).
(5) Section 230(3) and (4) (unreduced amount of taxed receipt under section 217 as a result of section 218) applies for the purposes of sections 63 to 67.
(6) In the application of sections 66 and 67 to Scotland—
(a) references to a lease being granted out of a taxed lease are to the grant of a sublease of land subject to the taxed lease, and
(b) references to the lease so granted are to be read as references to the sublease.
63 Tenants occupying land for purposes of trade treated as incurring expenses
(1) The tenant under the taxed lease is treated as incurring an expense of a revenue nature in respect of the land subject to the taxed lease for each qualifying day.
(2) If there is more than one taxed receipt, this section applies separately in relation to each of them.
(3) A day is a “qualifying day”, in relation to a taxed receipt, if it is a day—
(a) that falls within the receipt period of the taxed receipt, and
(b) on which the tenant occupies the whole or part of the land subject to the taxed lease for the purposes of carrying on a trade.
(4) If on the qualifying day the tenant occupies the whole of the land subject to the taxed lease for the purposes of the trade, the amount of the expense for the qualifying day by reference to the taxed receipt is given by the formula—
A
TRP
where—
A is the unreduced amount of the taxed receipt, and
TRP is the number of days in the receipt period of the taxed receipt.
(5) If on the qualifying day the tenant occupies part of the land subject to the taxed lease for the purposes of the trade, the amount of the expense for the qualifying day by reference to the taxed receipt is given by the formula—
F
×
A
TRP
where—
F is the fraction of the land that is so occupied calculated on a just and reasonable basis, and
A and TRP have the same meaning as in subsection (4).
(5A) No expense is to be determined under this section by reference to the taxed receipt if section 232(4B) or (4C) applies.
(6) This section is subject to section 64 (limit on deductions if tenant entitled to mineral extraction allowance).
64 Limit on deductions if tenant entitled to mineral extraction allowance
(1) This section applies if the tenant under the taxed lease has become entitled, in respect of expenditure on the acquisition of an interest in the land subject to the taxed lease, to an allowance for an accounting period under Part 5 of CAA 2001 (mineral extraction allowances) in respect of expenditure falling within section 403 of that Act (qualifying expenditure on acquiring a mineral asset).
(2) If the allowance is in respect of the whole of the expenditure, no deduction is allowed for expenses under section 63 for a qualifying day falling within that or a later accounting period.
(3) If the allowance is in respect of only part of the expenditure (“the allowable part”) the amount of the deduction for expenses under section 63 for a qualifying day falling within that or a later accounting period is calculated by multiplying the amount that, apart from this section, would be the amount of the deduction for the qualifying day by—
WE
-
AP
WE
where—
WE is the whole of the expenditure, and
AP is the allowable part of the expenditure.
65 Tenants dealing with land as property employed for purposes of trade
(1) This section applies if the tenant under the taxed lease—
(a) does not occupy the land subject to the taxed lease, or a part of it, but
(b) deals with its interest in the land, or the part of it, as property employed for the purposes of carrying on a trade.
(2) Section 63 applies as if the land or the part of it were occupied by the tenant for the purposes of the trade.
(3) But the tenant is not treated as incurring an expense in respect of the land for a qualifying day as a result of this section so far as the tenant is treated as incurring an expense under section 232 (tenants under taxed leases treated as incurring expenses) in respect of the land for the day in calculating the profits of the tenant's property business.
(4) This section is subject to sections 66 and 67 (restrictions on section 63 expenses where the additional calculation rule is relevant).
66 Restrictions on section 63 expenses: lease premium receipts
(1) This section applies if a lease has been granted out of the taxed lease and—
(a) in calculating the amount of a receipt of a property business under Chapter 4 of Part 4 (profits of property businesses: lease premiums etc) in respect of the lease, there is a reduction under section 228 (the additional calculation rule) by reference to the taxed receipt, or
(b) in calculating the amount of a receipt of a property business under Chapter 4 of Part 3 of ITTOIA 2005 (profits of property businesses: lease premiums etc) in respect of the lease, there is a reduction under section 288 of that Act (the additional calculation rule) by reference to the taxed receipt.
In this section and section 67 the receipt that is so reduced is referred to as a “lease premium receipt”.
(2) Subsections (3) to (5) provide for the application of section 63 as a result of section 65 for a qualifying day that falls within the receipt period of the lease premium receipt.
(3) The tenant under the taxed lease is treated as incurring an expense under section 63 as a result of section 65 for the qualifying day by reference to the taxed receipt only if the daily amount of the taxed receipt exceeds the daily reduction of the lease premium receipt.
(4) If the condition in subsection (3) is met, the amount of that expense for the qualifying day by reference to the taxed receipt is equal to that excess.
(5) If the qualifying day falls within the receipt period of more than one lease premium receipt, the reference in subsection (3) to the daily reduction of the lease premium receipt is to be read as a reference to the total of the daily reductions of each of the lease premium receipts whose receipt period includes the qualifying day.
(6) In this section—
the “daily amount” of the taxed receipt is given by the formula—
A
TRP
where—
A is the unreduced amount of the taxed receipt, and
TRP is the number of days in the receipt period of the taxed receipt, and
the “daily reduction” of a lease premium receipt is given by the formula—
AR
RRP
where—
AR is the reduction under section 228 below or section 288 of ITTOIA 2005 by reference to the taxed receipt, and
RRP is the number of days in the receipt period of the lease premium receipt.
(7) In this section references to a reduction under section 228 below or section 288 of ITTOIA 2005 by reference to a taxed receipt have the same meaning as in Chapter 4 of Part 4 (see section 230(6)).
(8) Section 67 explains how this section operates if the lease does not extend to the whole of the premises subject to the taxed lease.
67 Restrictions on section 63 expenses: lease of part of premises
(1) This section applies if—
(a) section 66 applies, and
(b) the lease granted out of the taxed lease does not extend to the whole of the premises subject to the taxed lease.
(2) Subsections (3) to (5) apply for a qualifying day that falls within the receipt period of the lease premium receipt.
(3) Sections 63, 65 and 66 apply separately in relation to the part of the premises subject to the lease and to the remainder of the premises.
(4) If—
(a) more than one lease that does not extend to the whole of the premises subject to the taxed lease has been granted out of the taxed lease, and
(b) the qualifying day falls within the receipt period of two or more lease premium receipts that relate to different leases,
sections 63, 65 and 66 apply separately in relation to each part of the premises subject to a lease to which such a lease premium receipt relates and to the remainder of the premises.
(5) Where sections 63, 65 and 66 apply in relation to a part of the premises, A becomes the amount calculated by multiplying the unreduced amount of the taxed receipt by the fraction of the premises constituted by the part.
(6) This fraction is calculated on a just and reasonable basis.
(1) In calculating the profits of a trade, a deduction is allowed for a payment—
(a) which is treated as earnings of an employee by virtue of section 225 of ITEPA 2003 (payments for restrictive undertakings), and
(b) which is made, or treated as made for the purposes of section 226 of that Act (valuable consideration given for restrictive undertakings), by the company carrying on the trade.
(2) The deduction is allowed for the accounting period in which the payment—
(a) is made, or
(b) is treated as made for the purposes of section 226 of ITEPA 2003.
70 Employees seconded to charities and educational establishments
(1) This section applies if a company carrying on a trade (“the employer”) makes the services of a person employed for the purposes of the trade available to—
(a) a charity, or
(b) an educational establishment,
on a basis that is stated and intended to be temporary.
(2) In calculating the profits of the trade, a deduction is allowed for expenses of the employer that are attributable to the employee's employment during the period of the secondment.
(3) In this section—
“educational establishment” means—
in England and Wales, any of the bodies mentioned in section 71(1),
in Scotland, any of the bodies mentioned in section 71(2),
in Northern Ireland, any of the bodies mentioned in section 71(3), and
any other educational body which is for the time being approved for the purposes of this section by the Secretary of State or, in Northern Ireland, the Department of Education, and
“the period of the secondment” means the period for which the employee's services are made available to the charity or educational establishment.
(1) A body in England and Wales is an educational establishment for the purposes of section 70 if it is—
(a) a local authority (but only to the extent that the services of the employee are made available to the authority for the purposes of, or in connection with, the education functions of the authority),
(b) an educational institution maintained or otherwise supported , in the exercise of their education functions, by a local authority,
(c) an independent school within the meaning of the Education Act 1996 (c. 56) registered under section 161 of the Education Act 2002 (c. 32), ...
(ca) an alternative provision Academy that is not an independent school within the meaning of the Education Act 1996,
(d) an institution within the further education sector, or the higher education sector, within the meaning of the Further and Higher Education Act 1992 (c. 13) , or
(e) a 16 to 19 Academy.
(2) A body in Scotland is an educational establishment for the purposes of section 70 if it is—
(a) an education authority within the meaning of the Education (Scotland) Act 1980 (c. 44),
(b) an educational establishment within the meaning of the Education (Scotland) Act 1980 managed by an education authority within the meaning of that Act,
(c) a public or grant-aided school within the meaning of the Education (Scotland) Act 1980,
(d) an independent school within the meaning of the Education (Scotland) Act 1980,
(e) a central institution within the meaning of the Education (Scotland) Act 1980 (c. 44),
(f) an institution within the higher education sector within the meaning of section 56(2) of the Further and Higher Education (Scotland) Act 1992 (c. 37), or
(g) a college of further education within the meaning of section 36(1) of the Further and Higher Education (Scotland) Act 1992.
(3) A body in Northern Ireland is an educational establishment for the purposes of section 70 if it is—
(a) an education and library board within the meaning of the Education and Libraries (Northern Ireland) Order 1986 (S.I. 1986/594 (N.I. 3)),
(b) a college of education, a grant-aided school or an independent school within the meaning of the Education and Libraries (Northern Ireland) Order 1986, or
(c) an institution of further education within the meaning of the Further Education (Northern Ireland) Order 1997 (S.I. 1997/1772 (N.I. 15)).
(4) In subsection (1) “local authority” and “education functions” have the same meaning as in the Education Act 1996 (see section 579(1) of that Act).
72 Payroll deduction schemes: contributions to agents' expenses
(1) This section applies if—
(a) a company carrying on a trade (“the employer”) is liable to make payments to an individual,
(b) income tax falls to be deducted from those payments as a result of PAYE regulations, and
(c) the employer withholds sums from those payments in accordance with an approved scheme and pays the sums to an approved agent.
(2) In calculating the profits of the employer's trade, a deduction is allowed for expenses incurred by the employer in making a payment to the agent for expenses which—
(a) have been incurred, or
(b) are to be incurred,
by the agent in connection with the agent's functions under the scheme.
(3) In this section “approved agent” and “approved scheme” have the same meaning as in section 714 of ITEPA 2003.
(1) In calculating the profits of a trade, a deduction is allowed for counselling expenses if—
(a) the company carrying on the trade (“the employer”) incurs the expenses,
(b) the expenses are incurred in relation to a person (“the employee”) who holds or has held an office or employment under the employer for the purposes of the trade, and
(c) the relevant conditions are met.
(2) In this section “counselling expenses” means expenses incurred—
(a) in the provision of services to the employee in connection with the cessation of the office or employment,
(b) in the payment or reimbursement of fees for such provision, or
(c) in the payment or reimbursement of travelling expenses in connection with such provision.
(3) In this section “the relevant conditions” means—
(a) conditions A to D for the purposes of section 310 of ITEPA 2003 (employment income exemptions: counselling and other outplacement services), and
(b) in the case of travel expenses, condition E for those purposes.
(1) In calculating the profits of a trade, a deduction is allowed for retraining course expenses if—
(a) the company carrying on the trade (“the employer”) incurs the expenses,
(b) they are incurred in relation to a person (“the employee”) who holds or has held an office or employment under the employer for the purposes of the trade, and
(c) the relevant conditions are met.
(2) In this section—
“retraining course expenses” means expenses incurred in the payment or reimbursement of retraining course expenses within the meaning given by section 311(2) of ITEPA 2003, and
“the relevant conditions” means—
the conditions in subsections (3) and (4) of section 311 of ITEPA 2003 (employment income exemptions: retraining courses), and
in the case of travel expenses, the conditions in subsection (5) of that section.
(1) This section applies if—
(a) an employer's liability to corporation tax for an accounting period is determined on the assumption that a deduction for expenditure is allowed under section 74, and
(b) the deduction would not otherwise have been allowed.
(2) If, subsequently—
(a) the condition in section 311(4)(a) of ITEPA 2003 is not met because of the employee's failure to begin the course within the period of one year after ceasing to be employed, or
(b) the condition in section 311(4)(b) of ITEPA 2003 is not met because of the employee's continued employment or re-employment,
an assessment of an amount or further amount of corporation tax due as a result of the condition not being met may be made under paragraph 41 of Schedule 18 to FA 1998.
(3) Such an assessment must be made before the end of the period of 6 years immediately following the end of the accounting period in which the failure to meet the condition occurred.
(4) If subsection (2) applies, the employer must give an officer of Revenue and Customs a notice containing particulars of—
(a) the employee's failure to begin the course,
(b) the employee's continued employment, or
(c) the employee's re-employment,
within 60 days of coming to know of it.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76 Redundancy payments and approved contractual payments
(1) Sections 77 to 79 apply if—
(a) a company (“the employer”) makes a redundancy payment or an approved contractual payment to another person (“the employee”), and
(b) the payment is in respect of the employee's employment wholly in the employer's trade or partly in the employer's trade and partly in one or more other capacities.
(2) For the purposes of this section and sections 77 to 81 “redundancy payment” means a redundancy payment payable under—
(a) Part 11 of the Employment Rights Act 1996 (c. 18), or
(b) Part 12 of the Employment Rights (Northern Ireland) Order 1996 (S.I. 1996/1919 (N.I. 16)).
(3) For the purposes of this section and those sections—
“contractual payment” means a payment which, under an agreement, an employer is liable to make to an employee on the termination of the employee's contract of employment, and
a contractual payment is “approved” if, in respect of that agreement, an order is in force under—
section 157 of the Employment Rights Act 1996, or
Article 192 of the Employment Rights (Northern Ireland) Order 1996.
77 Payments in respect of employment wholly in employer's trade
(1) This section applies if—
(a) the payment is in respect of the employee's employment wholly in the employer's trade, and
(b) no deduction would otherwise be allowable for the payment.
(2) In calculating the profits of the trade, a deduction is allowed under this section for the payment.
(3) The deduction under this section for an approved contractual payment must not exceed the amount which would have been due to the employee if a redundancy payment had been payable.
(4) If the payment is made after the employer has permanently ceased to carry on the trade, it is treated as made on the last day on which the employer carried on the trade.
(5) If there is a partnership change, subsection (4) does not apply so long as a company carrying on the trade in partnership immediately before the change continues to carry it on in partnership after the change.
(6) The reference in subsection (5) to a partnership change is to a change in the persons carrying on the trade in circumstances where the trade is carried on by persons in partnership immediately before or immediately after the change (or at both those times).
(7) The deduction under this section is allowed for the accounting period in which the payment is made (or treated under subsection (4) as made).
78 Payments in respect of employment in more than one capacity
(1) This section applies if the payment is in respect of the employee's employment with the employer—
(a) partly in the employer's trade, and
(b) partly in one or more other capacities.
(2) The amount of the redundancy payment, or the amount which would have been due if a redundancy payment had been payable, is to be apportioned on a just and reasonable basis between—
(a) the employment in the trade, and
(b) the employment in the other capacities.
(3) The part of the payment apportioned to the employment in the trade is treated as a payment in respect of the employee's employment wholly in the trade for the purposes of section 77.
(1) This section applies if the employer permanently ceases to carry on a trade or part of a trade and makes a payment to the employee in addition to—
(a) the redundancy payment, or
(b) if an approved contractual payment is made, the amount that would have been due if a redundancy payment had been payable.
(2) If, in calculating the profits of the trade—
(a) no deduction would otherwise be allowable for the additional payment, but
(b) a deduction would be allowable for it if the employer had not permanently ceased to carry on the trade or the part of the trade,
a deduction is allowed under this section for the additional payment.
(3) The deduction under this section is limited to 3 times the amount of—
(a) the redundancy payment, or
(b) if an approved contractual payment is made, the amount that would have been due if a redundancy payment had been payable.
(4) If the payment is made after the employer has permanently ceased to carry on the trade or the part of the trade, it is treated as made on the last day on which the employer carried on the trade or the part of the trade.
(5) The deduction under this section is allowed for the accounting period in which the payment is made (or treated under subsection (4) as made).
80 Application of section 79 in cases involving partnerships
(1) This section deals with the application of section 79 in circumstances where—
(a) there is a change in the persons carrying on a trade, and
(b) the trade is carried on by persons in partnership before or after the change (or at both those times).
(2) The employer is treated for the purposes of section 79 as permanently ceasing to carry on the trade unless a company carrying on the trade in partnership immediately before the change continues to carry it on in partnership after the change.