Change 1 Article Choose an article Title and introductory text 1 Overview of Act 2 Giving effect to arrangements made in relation to other territories 3 Arrangements may include retrospective or supplementary provision 4 Meaning of “double taxation” in sections 2 and 3 5 Orders under section 2: contents and procedure 6 The effect given by section 2 to double taxation arrangements 7 General regulations 8 Interpretation: “unilateral relief arrangements” means rules 1 to 9, etc 9 Rule 1: the unilateral entitlement to credit for non-UK tax 10 Rule 2: accrued income profits 11 Rule 3: interaction between double taxation arrangements and rules 1 and 2 12 Rule 4: cases in which, and calculation of, credit allowed for tax on dividends 13 Rule 5: credit for tax charged directly on dividend 14 Rule 6: credit for underlying tax on dividend paid to 10% associate of payer 15 Rule 7: credit for underlying tax on dividend paid to sub-10% associate 16 Rule 8: credit for underlying tax on dividend paid by exchanged associate 17 Rule 9: credit in relation to dividends for spared tax 18 Entitlement to credit for foreign tax reduces UK tax by amount of the credit 19 Time limits for claims for relief under section 18(2) 20 Foreign tax includes tax spared because of international development relief 21 Meaning of “the arrangements”, “the non-UK territory”, “foreign tax” etc 23 Time limits for claims for relief under section 22(2) 25 Credit not allowed if relief allowed against overseas tax 26 Credit not allowed under arrangements unless taxpayer is UK resident 27 Credit not allowed if person elects against credit 28 Unilateral relief for Isle of Man or Channel Islands tax 29 Unilateral relief for tax on income from employment or office 30 Unilateral relief for non-UK tax on non-resident's UK branch or agency etc 31 Calculation of income or gain where remittance basis does not apply 32 Calculation of amount received where UK tax charged on remittance basis 33 Limit on credit: minimisation of the foreign tax 34 Reduction in credit: payment by reference to foreign tax 35 Disallowed credit: use as a deduction 36 Amount of limit 37 Credit against tax on trade income: further rules 38 Credit against tax on royalties: further rules 39 Credit reduced by reference to accrued income losses 40 Amount of limit 41 Amount of limit 42 Amount of limit 43 Profits attributable to permanent establishments for purposes of section 42(2) 44 Credit against tax on trade income 45 Credit against tax on trade income: anti-avoidance rules 46 Applying section 44(2): asset in hedging relationship with derivative contract 47 Applying section 44(2): royalty income 48 Applying section 44(2): “portfolio” of transactions, arrangements or assets 49 Restricting section 44(3) if company is a bank or connected with a bank 49A Limit on credit in cases involving qualifying loan relationships of CFCs 49B Applying section 42(2) to non-trading credits from loan relationships etc 50 Tax for period on loan relationships 51 Tax for period on intangible fixed assets 52 General deductions 53 Earlier years' non-trading deficits on loan relationships 54 Non-trading debits on loan relationships 55 Current year's non-trading deficits on loan relationships 56 Non-trading debits on intangible fixed assets 57 Credit in respect of dividend: taking account of underlying tax 58 Calculation if dividend paid by non-resident company to resident company 59 Meaning of “relevant profits” in section 58 60 Underlying tax to be left out of account on claim to that effect 61 Calculation if section 58 does not apply 62 Meaning of “relevant profits” in section 61 63 Non-UK company dividend paid to 10% investor: relief for UK and other tax 64 Meaning of “dividend-paying chain” of companies 65 Relief for underlying tax paid by company lower in dividend-paying chain 66 Limitations on section 65(4) 67 Restriction of relief if underlying tax at rate higher than rate of corporation tax 68 Meaning of “avoidance scheme” in section 67 69 Dividends paid out of transferred profits 70 Underlying tax reflecting interest on loans 71 Foreign taxation of group as single entity 71A Circumstances in which section 71B applies 71B Reduction of foreign tax paid on profits of overseas PE 72 Application of section 73(1) 73 Carry-forward and carry-back of unrelieved foreign tax 74 Rules for carrying back unrelieved foreign tax 75 Two or more establishments treated as a single establishment 76 Former and subsequent establishments regarded as distinct establishments 77 Claims for relief under section 73(1) 78 Meaning of “overseas permanent establishment” 79 Time limits for action if tax adjustment makes credit excessive or insufficient 80 Duty to give notice that adjustment has rendered credit excessive 81 Countering effect of avoidance arrangements 82 Conditions for the purposes of section 81(1) 83 Schemes and arrangements referred to in section 82(4) 84 Section 83(2) and (4): schemes enabling attribution of foreign tax 85 Section 83(2) and (4): schemes about effect of paying foreign tax 85A Section 83(2) and (4): schemes involving deemed foreign tax 86 Section 83(2) and (4): schemes about claims or elections etc 87 Section 83(2) and (4): schemes that would reduce a person's tax liability 88 Section 83(2) and (4): schemes involving tax-deductible payments 89 Contents of counteraction notice 90 Consequences of counteraction notices 91 Counteraction notices given before tax return made 92 Counteraction notices given after tax return made 93 Amendment, closure notices and discovery assessments in section 92 cases 94 Information made available for the purposes of section 92(4) 95 Interpretation of sections 89 to 94 96 Companies with overseas branches: restriction of credit 97 Companies with more than one category of business: restriction of credit 97A Commercial allocation of relevant income to different categories of long-term business 98 Attribution for section 97 purposes if category is gross roll-up business 99 Allocation of expenses etc in calculations under section 35 of CTA 2009 100 First limitation for purposes of section 99(2) 101 Second limitation for purposes of section 99(2) 102 Interpreting sections 99 to 101 for life assurance or gross roll-up business 103 Interpreting sections 99 to 101 ... 104 Interpreting sections 100 and 101: amounts referable to category of business 105 Meaning of “chargeable gain” 106 Chapters 1 and 2 apply to capital gains tax separately from other taxes 107 Disregard of foreign tax referable to derivative contract 108 Disregard of foreign tax attributable to interest under a loan relationship 109 Repo cases in which no disregard under section 108 110 Stock-lending cases in which no disregard under section 108 111 When payment to beneficiary treated as arising from foreign source 112 Deduction from income for foreign tax (instead of credit against UK tax) 113 Deduction from capital gain for foreign tax (instead of credit against UK tax) 114 Time limits for action if tax adjustment makes reduction too large or too small 115 Duty to give notice that adjustment has rendered reduction too large 116 Introduction to section 117 117 Tax treated as chargeable in respect of transfer of loan relationship, derivative contract or intangible fixed assets 118 Introduction to section 119 119 Tax treated as chargeable in respect of transfer of loan relationship, derivative contract or intangible fixed assets 120 Introduction to section 121 121 Tax treated as chargeable in respect of relevant transactions 122 Tax treated as chargeable in respect of gains on transfer of non-UK business 123 Interpretation of sections 116 to 122 124 Giving effect to solutions to cases and mutual agreements resolving cases 125 Effect of, and deadline for, presenting a case 126 Meaning of “the Arbitration Convention” 127 Giving effect to agreements, decisions and opinions under the Convention 128 Disclosure under the Convention 128A Power by regulations to give effect to international obligations etc 128B Giving effect to requirements under section 128A regulations 128C Disclosure under international obligations etc 129 Disclosure where relief given overseas for tax paid in the United Kingdom 130 Interpreting provision about UK taxation of profits of foreign enterprises 130A Interpreting provision about UK taxation of pensions etc 131 Interpreting provision about interest influenced by special relationship 132 Interpreting provision about royalties influenced by special relationship 133 Special relationship rule for royalties: matters to be shown by taxpayer 134 Correcting assessments where relief is available 135 Relief under this Part: introductory 136 Interpretation of Part 137 Income tax credit etc for special withholding tax 138 Amount and application of the deemed tax under section 137 139 Capital gains tax credit etc for special withholding tax 140 Provisions about the deemed tax under section 139 141 Credit under Chapter 2 of Part 2 to be allowed first 142 Conditions for purposes of section 143 143 Taking account of special withholding tax in calculating income or gains 144 Issue of certificate 145 Refusal to issue certificate and appeal against refusal 146 Application of this Part 147 Tax calculations to be based on arm's length, not actual, provision 148 The “participation condition” 148A Participation condition treated as met: transfer pricing notice 149 “Actual provision” and “affected persons” 150 “Transaction” and “series of transactions” 151 “Arm's length provision” 152 Arm's length provision where actual provision relates to securities 153 Arm's length provision where security issued and guarantee given 153A Certain guarantees not capable of being arm’s length 153B Election for deemed guarantee 154 Interpretation of sections 153A and 153B 155 “Potential advantage” in relation to United Kingdom taxation 156 “Losses” and “profits” 157 Direct participation 158 Indirect participation: defined by sections 159 to 161 159 Indirect participation: potential direct participant 160 Indirect participation: one of several major participants 161 Indirect participation: involvement in financing arrangements 162 Indirect participation: sections 148 , 175 and 219(2): further financing cases 162A Agreements for common management 162B Arrangements to avoid participation condition 163 Meaning of “connected” in sections 159 and 161 164 Part to be interpreted in accordance with OECD principles 164A UK to UK Exemption 165 Exemption for dormant companies 166 Exemption for small and medium-sized enterprises 167 Small and medium-sized enterprises: exceptions from exemption 167A Small enterprises: exception from exemption: transfer pricing notice 168 Medium-sized enterprises: exception from exemption: transfer pricing notice 169 Giving of transfer pricing notices 170 Appeals against transfer pricing notices 171 Tax returns where transfer pricing notice given 172 Meaning of “small enterprise” and “medium-sized enterprise” 173 Meaning of “qualifying territory” and “non-qualifying territory” 173A Exchange gains and losses arising as a result of qualifying loan relationships and derivative contracts 174 Claim by the affected person who is not potentially advantaged etc 174A Claims under section 174 where disadvantaged person within charge to income tax 175 Application of section 174 where guarantee disallowed 176 Claims under section 174: advantaged person must have made return 177 Time for making, or amending, claim under section 174 178 Meaning of “return” in sections 176 and 177 179 Compensating payment if advantaged person is controlled foreign company 180 Application of section 174(2)(a) in relation to transfers of trading stock etc 181 Section 182 applies to claims where actual provision relates to borrowing 182 Making of section 182 claims 183 Giving effect to section 182 claims 184 Amending a section 182 claim if it is followed by relevant notice 185 Notice to potential claimants 186 Extending claim period if notice under section 185 not given or given late 187 Tax treatment if actual interest exceeds arm's length interest 187A Excess interest treated as a ... distribution 188 Double taxation relief by way of credit for foreign tax 189 Double taxation relief by way of deduction for foreign tax 190 Meaning of “relevant notice” 191 When sections 192 to 194 apply 192 Attribution to guarantor company of things done by borrower 192A Provision for cases within Part 6A 193 Interaction between claims under sections 174 and 192(1) 194 Claims under section 192(1): general provisions 195 Qualifying conditions for purposes of section 196 196 Balancing payments between affected persons: no charge to, or relief from, tax 197 Qualifying conditions for purposes of section 198 198 Balancing payments by guarantor to borrower: no charge to, or relief from, tax 199 Pre-conditions for making election under section 200 200 Election to pay tax rather than make balancing payments 201 Pre-conditions for making election under section 202 202 Election, in guarantee case, to pay tax rather than make balancing payments 203 Elections under section 200 or 202 204 Meaning of “capital market condition” in sections 199 and 201 205 Provision made or imposed between ring-fence trade and other activities 206 Meaning of “oil-related ring-fence trade” in sections 205 and 218 206A Modification of basic rule where allowances restricted for certain expenditure 207 Application of Part to unit trusts 208 The determinations which require the Commissioners' sanction 209 Determinations exempt from requirement for Commissioners' sanction 210 The requirement for the Commissioners' sanction 211 Restriction of right to appeal against Commissioners' approval 212 Appeals 213 Capital allowances 214 Chargeable gains 215 Manner of making adjustments to give effect to Part 216 Meaning of “the relevant activities” 217 Meaning of “control” and “firm” 217A Introduction 217B Unassessed transfer pricing profits 217C Conditions for being assessed under this Part at the UTPP rate 217D Effective tax mismatch outcome 217E Tax design condition 217F Preliminary notices 217G Representations by the company 217H Assessment 217I Amendment of company tax return by company 217J Amendment of assessment by HMRC 217K No postponement except before assessment is finalised for tax on same profits 217L Closure notices: rules relating to period for amendments 217M Appeal against assessment 217N Review of assessment 217P Settling of appeal by agreement 217Q No repayment 217R Exclusion of reliefs, deductions and set-offs 217S Assessment otherwise than at UTPP rate: no deduction for excess losses 217T Interpretation 218 Meaning of “advance pricing agreement” 219 Meaning of “associate” in section 218(2)(e) 220 Effect of agreement on party to it 221 Effect of revocation of agreement or breach of its conditions 222 Effect of agreement on non-parties 223 Application for agreement 224 Provision in agreement about years ended or begun before agreement made 225 Modification and revocation of agreement 226 Annulment of agreement for misrepresentation 227 Penalty for misrepresentation in connection with agreement 228 Party to agreement: duty to provide information 229 Modifications of agreement for double taxation purposes 230 Interpretation of Part: meaning of “Commissioners” and “officer” 259A Overview of Part 259B “Tax” means certain taxes on income and includes foreign tax etc 259BA References to equivalent provision to this Part under the law of a territory outside the United Kingdom 259BB Meaning of “payment”, “quasi-payment”, “payer”, “payee” etc 259BC The basic rules 259BD Chargeable companies in respect of CFCs and foreign CFCs 259BE Meaning of “hybrid entity”, “investor” and “investor jurisdiction” 259BF Meaning of “permanent establishment” 259C Overview of Chapter 259CA Circumstances in which the Chapter applies 259CB Hybrid or otherwise impermissible deduction/non-inclusion mismatches and their extent 259CC Interpretation of section 259CB 259CD Counteraction where the payer is within the charge to corporation tax for the payment period 259CE Counteraction where a payee is within the charge to corporation tax 259D Overview of Chapter 259DA Circumstances in which the Chapter applies 259DB Meaning of “hybrid transfer arrangement”, “underlying instrument” etc 259DC Hybrid transfer deduction/non-inclusion mismatches and their extent 259DD Interpretation of section 259DC 259DE The financial trader exclusion 259DF Counteraction where the payer is within the charge to corporation tax for the payment period 259DG Counteraction where a payee is within the charge to corporation tax 259E Overview of Chapter 259EA Circumstances in which the Chapter applies 259EB Hybrid payer deduction/non-inclusion mismatches and their extent 259EC Counteraction where the hybrid payer is within the charge to corporation tax for the payment period 259ED Counteraction where a payee is within the charge to corporation tax 259F Overview of Chapter 259FA Circumstances in which the Chapter applies 259FB Counteraction of the excessive PE deduction 259FC Meaning of excessive PE inclusion income 259G Overview of Chapter 259GA Circumstances in which the Chapter applies 259GB Hybrid payee deduction/non-inclusion mismatches and their extent 259GC Counteraction where the payer is within the charge to corporation tax for the payment period 259GD Counteraction where the investor is within the charge to corporation tax 259GE Counteraction where a hybrid payee is an LLP 259H Overview of Chapter 259HA Circumstances in which the Chapter applies 259HB Multinational payee deduction/non-inclusion mismatches and their extent 259HC Counteraction of the multinational payee deduction/non-inclusion mismatch 259I Overview of Chapter 259IA Circumstances in which the Chapter applies 259IB Counteraction where the investor is within the charge to corporation tax 259IC Counteraction where the hybrid entity is within the charge to corporation tax 259ICA Deemed dual inclusion income for the purposes of section 259IC 259ID Section 259ID income for the purposes of section 259IC 259J Overview of Chapter 259JA Circumstances in which the Chapter applies 259JB Counteraction where mismatch arises because of a dual resident company 259JC Counteraction where mismatch arises because of a relevant multinational and the UK is the parent jurisdiction 259JD Counteraction where mismatch arises because of a relevant multinational and is not counteracted in the parent jurisdiction 259JE Meaning of excessive PE inclusion income 259K Overview of Chapter 259KA Circumstances in which the Chapter applies 259KB Meaning of “dual territory double deduction”, “excessive PE deduction” and “PE jurisdiction” 259KC Denial of the relevant deduction in relation to the imported mismatch payment 259KD Deductions from dual inclusion income 259KE Limit on reduction under section 259KC 259KF Provision for cases within Part 4 259L Adjustments where suppositions cease to be reasonable 259LA Deduction from taxable total profits where an amount of ordinary income arises late 259LB Adjustments in light of later treatment for accounting purposes 259ZM Overview of Chapter 259ZMA Circumstances in which Chapter applies 259ZMB Claims for allocation of DII surplus 259ZMC The unused part of the DII surplus 259ZMD The unused part of the DII shortfall 259ZME Groups of companies 259ZMF Meaning of “dual inclusion income” and “counteraction amount” 259M Countering the effect of avoidance arrangements 259MA Meaning of “transparent fund” 259MB Application of Chapters 3, 4, 5 and 7 259MC Application of Chapter 9 259MD Application of Chapter 11 259N Meaning of “financial instrument” 259NA Meaning of “relevant investment fund” 259NB Control groups 259NC Related persons 259ND Meaning of “50% investment” and “25% investment” 259NDA Meaning of “qualifying institutional investor” etc 259NE Treatment of a person who is a member of a partnership 259NEZA Securitisation companies 259NEA Priority 259NEB Relevant debt relief circumstances: introductory 259NEC Release of debts 259NED Release of connected companies debts 259NEE Release of connected companies debts during creditor’s insolvency 259NEF Corporate rescue: debt released shortly after connection arises 259NF Definitions 354 Power to make regulations about tax treatment of participants 355 Meaning of “offshore fund” 356 Meaning of “mutual fund” 357 Exceptions to definition of “mutual fund” 358 Meaning of “relevant income-producing asset” 359 Power to make regulations about exceptions to definition of “mutual fund” 360 Treatment of umbrella arrangements 361 Treatment of arrangements comprising more than one class of interest 362 Meaning of “participant” and “participation” 363 Meaning of “umbrella arrangements” and “part of umbrella arrangements” 363A Residence of undertakings for collective investment in transferable securities and alternative investment funds 364 Oil activities 365 Alternative finance arrangements 366 Power to amend the alternative finance provisions 367 Leasing arrangements: finance leases and loans 368 Sale and lease-back etc 369 Factoring of income etc 370 UK representatives of non-UK residents 371 Miscellaneous relocations 371AA Overview of Part 371BA Introduction to the CFC charge 371BB The CFC charge gateway 371BC Charging the CFC charge 371BD Chargeable companies 371BE Companies which are managers of offshore funds etc 371BF Companies which are participants in offshore funds 371BG Companies holding shares as trading assets etc 371BH Companies carrying on BLAGAB 371BI Banking companies 371CA Does Chapter 4 apply? 371CB Does Chapter 5 apply? 371CC Incidental non-trading finance profits: the 5% rule 371CD Incidental non-trading finance profits: the further 5% rule 371CE Does Chapter 6 apply? 371CEA Section 371CE: meaning of “group treasury company” 371CF Does Chapter 7 apply? 371CG Does Chapter 8 apply? 371DA Introduction to Chapter 371DB The steps 371DC Exclusion: UK activities a minority of total activities 371DD Exclusion: economic value 371DE Exclusion: independent companies' arrangements 371DF Exclusion: trading profits (the basic rule) 371DG Exclusion: trading profits (business premises condition) 371DH Exclusion: trading profits (income condition) 371DI Exclusion: trading profits (management expenditure condition) 371DJ Exclusion: trading profits (IP condition) 371DK Exclusion: trading profits (export of goods condition) 371DL Exclusion: trading profits (anti-avoidance) 371EA The basic rule 371EB UK activities 371EC Capital investment from the UK 371ED Arrangements in lieu of dividends etc to UK resident companies etc 371EE Leases to UK resident companies etc 371FA The basic rule 371FB Qualifying loan relationships 371FC Loans from foreign permanent establishments of UK resident companies 371FD Exclusion: banking business 371FE Exclusion: insurance business 371GA The basic rule 371HA The basic rule 371IA The basic rule 371IB Loans funded out of qualifying resources 371IC What is the “qualifying value” of “relevant pre-acquisition funds or other assets”? 371ID The 75% exemption 371IE The “matched interest profits” exemption 371IF Determining the profits of a qualifying loan relationship 371IG What is a “qualifying loan relationship”? 371IH Exclusions from definition of “qualifying loan relationship” 371II Power to amend definitions 371IJ Claims 371JA Introduction to Chapter 371JB The basic rule 371JC When does an exempt period begin? 371JD How long is an exempt period? 371JE Adjustment of profits passing through the CFC charge gateway 371JF Anti-avoidance 371JG Amendment of company tax returns 371KA Introduction to Chapter 371KB The basic rule 371KC How to determine the territory in which a CFC is resident 371KD What is “the threshold amount”? 371KE Category A income: the basic rule 371KF Category A income: permanent establishments in excluded territories 371KG Category B income 371KH Category C income 371KI Category D income 371KJ The IP condition 371LA Introduction to Chapter 371LB The basic rule 371LC Anti-avoidance 371MA Introduction to Chapter 371MB The basic rule 371MC Anti-avoidance 371NA Introduction to Chapter 371NB The basic rule 371NC Reductions to “the local tax amount” 371ND What are “designer rate tax provisions”? 371NE How to determine “the corresponding UK tax” 371OA Application of Chapter 371OB Provision about interpretation 371OC “Relevant interests” of UK resident companies 371OD “Relevant interests” of persons related to UK resident companies 371OE Other “relevant interests” 371PA What is “creditable tax”? 371QA Application of Chapter 371QB Provision about interpretation 371QC The basic rules 371QD Apportionments to be made in proportion to shareholding 371QE Indirect shareholdings 371QF Variable shareholdings 371QG Anti-avoidance 371RA Overview of Chapter 371RB Legal and economic control 371RC Legal and economic control: the 40% rule 371RD Legal and economic control: supplementary provision 371RE Control determined by reference to accounting standards 371RF Power to amend section 371RE etc 371RG Companies in which a UK resident company has more than a 50% investment 371SA Overview of Chapter 371SB What are “assumed taxable total profits” and “assumed total profits”? 371SC What are “the corporation tax assumptions”? 371SD UK residence etc 371SE Close company 371SF Claims and elections 371SG Disapplication of assumption in section 371SF(1) 371SH Elections under section 9A of CTA 2010 371SI Modification of sections 6 and 7 of CTA 2010 371SJ Elections for leases to be treated as long funding leases 371SK Intangible fixed assets 371SKA Restrictions on certain deductions: deductions allowances 371SL Group relief etc 371SLA Corporate interest restriction 371SM Capital allowances 371SN Unremittable overseas income 371SO Tax advantages 371SP Disguised interest: application of Chapter 2A of Part 6 of CTA 2009 371SQ Shares accounted for as liabilities: application of section 521C of CTA 2009 371SR Double taxation relief: countering effect of avoidance arrangements 371TA The basic rule 371TB How to determine the territory in which the CFC is resident 371TC Elections and designations about residence 371UA Introduction to Chapter 371UB Application of the Taxes Acts to the CFC charge 371UBA Payments in respect of a charge on a banking company: information to be provided 371UC Just and reasonable apportionments 371UD Relief against sum charged 371UE Appeals affecting more than one person 371UF Recovery of sum charged from other UK resident companies 371VA Definitions 371VB Accounting periods 371VC Accounting profits 371VD Adjustments to accounting profits 371VE Cell companies etc 371VF Connected persons etc 371VG Finance profits 371VH Interests in companies 371VI Property business profits 371VIA Relevant finance leases 371VJ Regulations 372 Overview 373 Meaning of “subject to interest restrictions”, “the total disallowed amount” etc 374 Interest restriction returns 375 Disallowance of deductions: full interest restriction return submitted 376 Disallowance of deductions: no return, or non-compliant return, submitted 377 Disallowance of deductions: identification of the tax-interest amounts to be left out of account 378 Disallowed tax-interest expense amounts carried forward 379 Reactivation of interest 380 Reactivation of deductions: identification of the tax-interest amounts to be brought into account 381 Set-off of disallowances and reactivations in the same accounting period 382 The tax-interest expense amounts of a company 383 Relevant loan relationship debits 384 Relevant derivative contract debits 385 The tax-interest income amounts of a company 386 Relevant loan relationship credits 387 Relevant derivative contract credits 388 Double taxation relief 389 The “net tax-interest expense” or “net tax-interest income” of a company 390 The worldwide group's aggregate net tax-interest expense and income 391 Meaning of “impairment loss” 391A Amounts capitalised in carrying value of intangible fixed assets 392 The interest capacity of a worldwide group for a period of account 393 Amount of interest allowance for a period that is “available” in a later period 394 When interest allowance is “used” 395 Amount of interest allowance for a period of account that is “unexpired” in later period 395A Carry forward of interest allowance: new holding company 396 The interest allowance of a worldwide group for a period of account 397 Basic interest allowance calculated using fixed ratio method 398 Basic interest allowance calculated using group ratio method 399 The group ratio percentage 400 The debt cap 400A Carry forward of excess debt cap: new holding company 401 Effect of group ratio (blended) election on group ratio percentage 402 Effect of group ratio (blended) election on group ratio debt cap 403 Calculations under sections 401 and 402: investor worldwide groups 404 Meaning of “investor”, “related party investor” and investor's “share” 405 The aggregate tax-EBITDA of a worldwide group 406 The tax-EBITDA of a company 407 Amounts not brought into account in determining a company's tax-EBITDA 408 Excluded relevant intangibles debits and excluded relevant intangibles credits 409 Double taxation relief 410 Net group-interest expense 411 “Relevant expense amount” and “relevant income amount” 412 Section 411: interpretation 413 Adjusted net group-interest expense 414 Qualifying net group-interest expense 415 Section 414: interpretation 416 Group-EBITDA 417 The capital (expenditure) adjustment 418 The capital (fair value movement) adjustment 419 The capital (disposals) adjustment 420 Derivative contracts subject to fair value accounting 421 Derivative contracts subject to fair value accounting: interpretation 422 Group-EBITDA (chargeable gains) election 423 Capitalised interest brought into account for tax purposes in accordance with GAAP 424 Employers' pension contributions 424A Unpaid employees’ remuneration 425 Employee share acquisitions 426 Changes in accounting policy 427 Group interest and group-EBITDA 428 Section 427: associated worldwide groups 429 Meaning of “non-consolidated associate” 430 Interest allowance (consolidated partnerships) election 431 Interpretation of Chapter 432 Overview of Chapter 433 Meaning of “qualifying infrastructure company” 434 Elections under section 433 435 Group elections modifying the operation of sections 433 and 434 436 Meaning of “qualifying infrastructure activity” 437 Section 436: supplementary 438 Exemption for interest payable to third parties etc 438A Application of section 438: certain creditors treated as qualifying infrastructure companies 439 Exemption in respect of certain pre-13 May 2016 loan relationships 440 Loans etc made by qualifying infrastructure companies to be ignored 441 Tax-EBITDA of qualifying infrastructure company to be nil 442 Amounts of qualifying infrastructure company left out of account for other purposes 443 Interest capacity for group with qualifying infrastructure company etc 444 Joint venture companies 445 Joint venture groups 446 Joint ventures: supplementary 447 Partnerships and other transparent entities 448 Decommissioning 449 Minor definitions for purposes of this Chapter 450 Banking companies 451 Oil and gas 452 Real Estate Investment Trusts 453 Insurance entities 454 Members of Lloyd's 454A Investments held by investment managers 455 Shipping companies subject to tonnage tax 456 Creditor relationships of companies determined on basis of fair value accounting 457 Elections under section 456: deemed debits and credits 458 Co-operative and community benefit societies etc 459 Charities 460 Long funding operating leases and finance leases 461 Counteracting effect of avoidance arrangements 462 Expressions relating to “related parties”: introduction 463 Whether a person is generally a “related party” of another 464 Meaning of “25% investment” 465 Attribution of rights and interests 466 Certain loan relationships etc to be treated as made between related parties 467 Holdings of debt and equity in same proportions 468 Debts with same rights where unrelated parties hold more than 50% 469 Debt restructuring 470 Ordinary independent financing arrangements by banks and others 471 Loans made by relevant public bodies 472 Finance leases granted before 20 March 2017 473 Meaning of “a worldwide group”, “ultimate parent” etc 474 Interpretation of section 473: “relevant entity” 475 Meaning of “non-consolidated subsidiary” and “consolidated subsidiary” 476 Continuity of identity of a worldwide group through time 477 Treatment of stapled entities 478 Treatment of business combinations 479 “Financial statements” of a worldwide group 480 “Period of account” of worldwide group 481 Actual financial statements not drawn up on acceptable principles 482 Actual financial statements drawn up on acceptable principles but consolidating wrong subsidiaries 483 Actual financial statements covering more than one worldwide group 484 No actual financial statements: ultimate parent draws up financial statements 485 No actual financial statements: other cases 486 Election altering period of account deemed under section 485 487 Actual financial statements ignored if for too long a period or too late 488 Meaning of “IAS financial statements” 489 References to amounts recognised in financial statements 490 Meaning of “relevant accounting period” 491 Meaning of “relevant public body” 492 Meaning of “UK group company” 493 Embedded derivatives 494 Other interpretation 495 Financial statements: different treatment by group or members 496 Parties to capital market arrangements 497 Change in accounting standards 498 Regulations 499 Orders and regulations 500 Abbreviated references to Acts 501 Minor and consequential amendments 502 Transitional provisions and savings 503 Repeals and revocations 504 Index of defined expressions 505 Extent 506 Commencement 507 Short title Schedule A1 Assessment of unassessed transfer pricing profits: partnerships and Lloyd’s syndicates SCHEDULE 1 Oil activities: new Chapter 16A of Part 2 of ITTOIA 2005 SCHEDULE 2 Alternative finance arrangements SCHEDULE 3 Leasing arrangements: finance leases and loans SCHEDULE 4 Sale and lease-back etc: new Part 12A of ITA 2007 SCHEDULE 5 Factoring of income etc: new Chapters 5B and 5C of Part 13 of ITA 2007 SCHEDULE 6 UK Representatives of non-UK residents SCHEDULE 7 Miscellaneous relocations SCHEDULE 7A Interest restriction returns SCHEDULE 8 Minor and consequential amendments SCHEDULE 9 Transitionals and savings etc SCHEDULE 10 Repeals and revocations SCHEDULE 11 Index of defined expressions used in Parts 2 to 8
What to do with it
As published
426 Changes in accounting policy
(1) Where an interest allowance (alternative calculation) election has effect in relation to a period of account of a worldwide group (“the relevant period of account”), this Chapter applies in relation to the period subject to this section.
(2) The financial statements of the group for the relevant period of account are to be treated as subject to such adjustments as would be made to them under the change of accounting policy provisions if the group were a company that—
(a) was within the charge to corporation tax,
(b) held the assets and owed the liabilities recognised in the financial statements, to the extent that they are so recognised, and
(c) carried on the trades and other activities giving rise to amounts recognised in the financial statements as items of profit and loss.
(3) In this section “the change of accounting policy provisions” means the following provisions as modified by subsection (4)—
(a) Chapter 14 of Part 3 of CTA 2009 (trading profits);
(ab) sections 261 and 262 of that Act (property profits);
(b) sections 315 to 319 of that Act (loan relationships);
(c) sections 613 to 615 of that Act (derivative contracts);
(d) Chapter 15 of Part 8 of that Act (intangible fixed assets);
(e) the Loan Relationships and Derivative Contracts (Change of Accounting Practice) Regulations 2004 (S.I. 2004/3271);
(f) paragraphs 12 to 17 of Schedule 14 to FA 2019 (transitional provision following the repeal of section 53 of FA 2011) so far as they have effect in relation to adjustments under Chapter 14 of Part 3 of CTA 2009 or sections 261 and 262 of that Act.
(4) The provisions mentioned in subsection (3)—
(a) are to have effect for the purposes of this section as if their application were limited to cases where there is a change of accounting policy and as if any election had been made under the provisions, and
(b) are to have effect subject to any modifications necessary for the purposes of this section.
Your wording
Your change, as a redline
426 Changes in accounting policy
(1) Where an interest allowance (alternative calculation) election has effect in relation to a period of account of a worldwide group (“the relevant period of account”), this Chapter applies in relation to the period subject to this section.
(2) The financial statements of the group for the relevant period of account are to be treated as subject to such adjustments as would be made to them under the change of accounting policy provisions if the group were a company that—
(a) was within the charge to corporation tax,
(b) held the assets and owed the liabilities recognised in the financial statements, to the extent that they are so recognised, and
(c) carried on the trades and other activities giving rise to amounts recognised in the financial statements as items of profit and loss.
(3) In this section “the change of accounting policy provisions” means the following provisions as modified by subsection (4)—
(a) Chapter 14 of Part 3 of CTA 2009 (trading profits);
(ab) sections 261 and 262 of that Act (property profits);
(b) sections 315 to 319 of that Act (loan relationships);
(c) sections 613 to 615 of that Act (derivative contracts);
(d) Chapter 15 of Part 8 of that Act (intangible fixed assets);
(e) the Loan Relationships and Derivative Contracts (Change of Accounting Practice) Regulations 2004 (S.I. 2004/3271);
(f) paragraphs 12 to 17 of Schedule 14 to FA 2019 (transitional provision following the repeal of section 53 of FA 2011) so far as they have effect in relation to adjustments under Chapter 14 of Part 3 of CTA 2009 or sections 261 and 262 of that Act.
(4) The provisions mentioned in subsection (3)—
(a) are to have effect for the purposes of this section as if their application were limited to cases where there is a change of accounting policy and as if any election had been made under the provisions, and
(b) are to have effect subject to any modifications necessary for the purposes of this section.
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.