(1) A section 182 claim is not a claim within paragraph 57 or 58 of Schedule 18 to FA 1998 (company tax returns, assessments and related matters).
(2) Accordingly, paragraph 59 of that Schedule (application of Schedule 1A to TMA 1970) has effect in relation to a section 182 claim.
(3) If—
(a) a section 182 claim is made before a calculation within section 176(1) has been made,
(b) such a calculation is subsequently made, and
(c) the claim is not consistent with the calculation,
the affected persons are to be treated as if (instead of the claim actually made) a claim had been made that was consistent with the calculation.
(4) All such adjustments are to be made (including by the making of assessments) as are required to give effect to subsection (3).
(5) Subsection (4) has effect despite any limit on the time within which any adjustment may be made.
184 Amending a section 182 claim if it is followed by relevant notice
(1) Subsection (2) applies if—
(a) a section 182 claim is made,
(b) a return is subsequently made by the advantaged person on the basis mentioned in section 176(1), and
(c) a relevant notice (see section 190) taking account of such a determination as is mentioned in section 176(3)(b) is subsequently given to the advantaged person.
(2) If any amendment of the claim is appropriate in consequence of the determination contained in the relevant notice, the amendment may be made by—
(a) the disadvantaged person, or
(b) the advantaged person.
(3) If an amendment under subsection (2) is made by the advantaged person it is to be taken to be made on behalf of the disadvantaged person.
(4) Any amendment under subsection (2) must be made within the period mentioned in section 177(3).
(5) Subsection (4) has effect subject to section 186(3) (which provides for the extension of the period for making an amendment).
(1) Subsection (2) applies if—
(a) a relevant notice (see section 190) is given to any person,
(b) the notice, or anything contained in it, takes account of a transfer-pricing determination, and
(c) it appears to an officer that there is a person (“DP”) who is or may be a disadvantaged person by reference to the subject-matter of the determination.
(2) The officer must give to DP a notice containing particulars of the determination.
(3) A contravention of subsection (2) does not affect the validity—
(a) of the relevant notice, or
(b) of any determination to which the notice relates.
(4) For the purposes of this section, a person is a disadvantaged person by reference to the subject-matter of a transfer-pricing determination if (and only if) the person—
(a) is entitled, in consequence of the making of the determination, to make or amend a claim under section 174, or
(b) will be entitled, because of section 212(3), to be a party to any proceedings on an appeal relating to the determination.
(5) In this section—
“officer” means officer of Revenue and Customs, and
“transfer-pricing determination” means a determination of an amount that is to be brought into account for tax purposes in respect of—
any assumption made under section 147(3) or (5), or
any advance-pricing-agreement assumptions (see section 222(6)).
186 Extending claim period if notice under section 185 not given or given late
(1) If there is a contravention of section 185(2), the Commissioners must consider whether, as a result of the contravention, any person has been prejudiced with respect to the making or amendment of a claim under section 174.
(2) Subsection (3) applies if—
(a) there is a contravention of section 185(2), or
(b) a notice required by section 185(2) is given after the relevant notice concerned.
(3) The Commissioners may, if they think fit, treat the period for the making or amendment of a claim under section 174 in the case concerned as extended by such further period as appears to them to be appropriate.
(4) In this section “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs.
187 Tax treatment if actual interest exceeds arm's length interest
(1) Subsection (6) applies if the following conditions are met.
(2) Condition A is that interest is paid by any person under the actual provision.
(3) Condition B is that section 147(3) or (5) applies in relation to the actual provision.
(4) Condition C is—
(a) that the amount (“ALINT”) of interest that would have been payable under the arm's length provision is less than the amount of interest paid under the actual provision, or
(b) that there would not have been any interest payable under the arm's length provision (so that ALINT is nil).
(5) Condition D is that the person receiving the interest paid under the actual provision makes—
(a) a claim under section 174, or
(b) a section 182 claim.
(6) The interest paid under the actual provision, so far as it exceeds ALINT—
(a) is not to be regarded as chargeable under Chapter 2 of Part 4 of ITTOIA 2005,
(b) is not subject to the provisions of Part 15 of ITA 2007 (deduction of income tax at source), and
(c) is not required to be brought into account under Part 5 of CTA 2009 (loan relationships) as a non-trading credit.
187A Excess interest treated as a ... distribution
(1) Subsection (2) applies if Conditions A to C in section 187 are met in circumstances where section 174A prevents a claim under section 174.
(2) The interest paid under the actual provision, so far as it exceeds ALINT, is treated for the purposes of the Income Tax Acts as a dividend paid by the company which paid the interest (and, accordingly, as a ...distribution).
188 Double taxation relief by way of credit for foreign tax
(1) Subsection (2) applies if—
(a) a claim is made under section 174, and
(b) the disadvantaged person (“DP”) is entitled on that claim to make a calculation, or to have an adjustment made, on the basis that the arm's length provision was made or imposed instead of the actual provision.
(2) Assumptions A and B are to be made in DP's case in relation to any credit for foreign tax which DP has been, or may be, given—
(a) under any double taxation arrangements, or
(b) under section 18(1)(b) and (2) (relief under unilateral relief arrangements).
(3) Subsection (2) has effect subject to section 189(2).
(4) Assumption A is that the foreign tax paid or payable by DP does not include any amount of foreign tax which would not be or have become payable were it to be assumed for the purposes of that tax that the arm's length provision had been made or imposed instead of the actual provision.
(5) Assumption B is that the amount of DP's relevant profits in respect of which DP is given credit for foreign tax does not include the amount (if any) by which DP's relevant profits are treated as reduced in accordance with section 174.
(6) If any adjustment is required to be made for the purpose of giving effect to any of the preceding provisions of this section—
(a) it may be made by setting the amount of the adjustment against any relief or repayment to which DP is entitled in pursuance of DP's claim under section 174, and
(b) nothing in the Tax Acts limiting the time within which any assessment is to be or may be made or amended prevents that adjustment from being so made.
(7) In subsection (5) “DP's relevant profits” means the profits arising to DP from the carrying on of the relevant activities (see section 216).
(8) In this section—
“double taxation arrangements” means arrangements that have effect under section 2(1) (double taxation relief by agreement with territories outside the United Kingdom), and
“foreign tax” means—
any tax under the law of a territory outside the United Kingdom, or
any amount that, for the purposes of any double taxation arrangements, is to be treated as if it were tax under the law of a territory outside the United Kingdom.
(9) In determining for the purposes of this section whether a person is—
(a) under any double taxation arrangements, or
(b) under section 18(1)(b) and (2),
to be given credit for foreign tax, ignore any requirement that a claim is made before such a credit is given.
189 Double taxation relief by way of deduction for foreign tax
(1) Subsection (2) applies if—
(a) a claim is made under section 174,
(b) the disadvantaged person (“DP”) is entitled on that claim to make a calculation, or to have an adjustment made, on the basis that the arm's length provision was made or imposed instead of the actual provision,
(c) the application of that basis in the calculation of DP's profits or losses for any chargeable period involves a reduction in the amount of any income, and
(d) that income is also income that is to be reduced in accordance with section 112(1) (deduction for foreign tax where no credit allowed).
(2) If this subsection applies—
(a) the reduction mentioned in subsection (1)(c) is to be treated as made before any reduction under section 112(1), and
(b) tax paid, in the place in which any income arises, on so much of that income as is represented by the amount of the reduction mentioned in subsection (1)(c) is to be disregarded for the purposes of section 112(1).
(3) If any adjustment is required to be made for the purpose of giving effect to any of the preceding provisions of this section—
(a) it may be made by setting the amount of the adjustment against any relief or repayment to which DP is entitled in pursuance of DP's claim under section 174, and
(b) nothing in the Tax Acts limiting the time within which any assessment is to be or may be made or amended prevents that adjustment from being so made.
In this Chapter “relevant notice” means—
(a) a closure notice under section 28A(1) of TMA 1970 in relation to an enquiry into a return under section 8 or 8A of TMA 1970,
(b) a closure notice under section 28B(1) of TMA 1970 in relation to an enquiry into a partnership return,
(c) a closure notice under paragraph 32 of Schedule 18 to FA 1998 in relation to an enquiry into a company tax return,
(d) a notice under section 30B(1) of TMA 1970 amending a partnership return,
(e) a notice of an assessment under section 29 of TMA 1970,
(f) a notice of a discovery assessment under paragraph 41 of Schedule 18 to FA 1998 (which includes a discovery assessment under that paragraph as applied by paragraph 52 of that Schedule), or
(g) a notice of a discovery determination under paragraph 41 of Schedule 18 to FA 1998.
(1) Sections 192 to 194 apply if—
(a) one of the affected persons (“the borrower”) has borrowing liabilities,
(b) those liabilities are to any extent the subject of a guarantee provided by a company (“the guarantor company”),
(c) in calculating the profits and losses of the borrower for tax purposes, the amounts to be deducted in respect of interest or other amounts payable in respect of the borrowing are required to be reduced (whether or not to nil) under section 147(3) or (5), and
(d) the reduction is a result of provision for the guarantee not being regarded as arm’s length in accordance with section 153A (certain guarantees not capable of being arm’s length).
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) In this Chapter—
“borrowing”, “guarantee” and “implicit support” have the meanings they have in sections 153A and 153B (see section 154);
“the borrowing transaction” means the transaction mentioned in subsection (1)(a);
“the guarantor company” has the meaning given by subsection (1)(b),
“the borrower” has the meaning given by subsection (1)(a), and
...
192 Attribution to guarantor company of things done by borrower
(1) On the making of a claim, the guarantor company is, to the extent of the reduction mentioned in subsection (1)(c) of section 191 (so far as it meets the condition in subsection (1)(d) of that section), to be treated for all purposes of the Taxes Acts as if it (and not the borrower)—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) was the person that owed the borrowing liabilities under the borrowing transaction, and
(c) had paid any interest or other amounts paid under it by the borrower.
(2) Subsection (1) is subject to subsection (3).
(3) Where the borrower’s liabilities under the borrowing transaction are the subject of two or more guarantees (whether or not provided by the same person), TD must not exceed TR, where—
TD is the total of the amounts brought into account by the guarantor companies because of subsection (1), and
TR is the total amount of the reductions within section 191(1)(c).
(4) Provision about claims under subsection (1) is made by—
section 193 (interaction between claims under subsection (1) and claims under section 174), and
section 194 (general provision about claims under subsection (1)).
(5) In subsection (1) “the Taxes Acts” has the meaning given by section 118(1) of TMA 1970.
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Subsection (2) applies to the extent that—
(a) there is an amount to be deducted in respect of a payment by the borrower in respect of the borrowing transaction,
(b) that amount is required to be reduced (whether or not to nil) under section 147(3) or (5),
(c) the guarantor company makes a claim under section 192(1) in respect of that reduction, and
(d) as regards the payment, provision in Part 6A would, but for the reduction, apply in relation to the tax treatment of the borrower (“the relevant tax treatment”).
(2) The relevant tax treatment is to apply in relation to the guarantor company.
193 Interaction between claims under sections 174 and 192(1)
(1) In this section “the loan provision” means the actual provision made or imposed between—
(a) the borrower, and
(b) another person (“the lender”)
which is provision in relation to the borrowing transaction.
(2) Subsections (3) and (4) apply if—
(a) the guarantor company makes a claim under section 192(1), and
(b) the lender makes a claim under section 174 in relation to the loan provision.
(3) In determining the arm's length provision for the purposes of section 174(2)(a) in relation to the lender’s claim, additional amounts are to be brought into account as credits corresponding to the debits that fall to be brought into account by the guarantor company because of section 192(1).
(4) If—
(a) the lender makes its claim under section 174 before the guarantor company makes its claim under section 192(1), and
(b) the calculation on which the lender’s claim is based does not comply with subsection (3),
the guarantor company's claim is to be disallowed.
194 Claims under section 192(1): general provisions
(1) A claim under section 192(1) may be made—
(a) by the guarantor company,
(b) if there are two or more guarantor companies, by those companies acting together, or
(c) by the borrower.
(2) A claim made under section 192(1) by the borrower is to be taken to be made on behalf of the guarantor company or companies.
(3) Sections 175 to 177 apply in relation to a claim under section 192(1) made by or on behalf of any person or persons as they apply in relation to a claim under section 174 made by the disadvantaged person, but taking—
(a) references in sections 176 and 177 to the advantaged person as references to the borrower, and
(b) the reference in section 177 to the disadvantaged person as a reference to the guarantor company or companies.
195 Qualifying conditions for purposes of section 196
(1) Conditions A to D are “the qualifying conditions” for the purposes of section 196.
(2) Condition A is that only one of the affected persons (“the advantaged person”) is a person on whom a potential advantage in relation to United Kingdom taxation is conferred by the actual provision.
(3) Condition B is that the other affected person (“the disadvantaged person”) is within the charge to income tax or corporation tax in respect of profits arising from the relevant activities (see section 216).
(4) Condition C is that—
(a) a payment (the “balancing payment”) is made, or
(b) two or more payments (the “balancing payments”) are made,
to the advantaged person by the disadvantaged person.
(5) Condition D is that the sole or main reason for making that payment or those payments is that section 147(3) or (5) applies.
196 Balancing payments between affected persons: no charge to, or relief from, tax
(1) If each of the qualifying conditions (see section 195) is met, subsection (2) applies—
(a) to the balancing payment if, or so far as, its amount does not exceed the available compensating adjustment, or
(b) to the balancing payments if, or so far as, their total amount does not exceed the available compensating adjustment.
(2) Any payment to which this subsection applies—
(a) is not to be taken into account in calculating profits or losses of either of the affected persons for the purposes of income tax or corporation tax, and
(b) is not for any purpose of the Corporation Tax Acts to be regarded as a distribution.
(3) In subsection (1) “the available compensating adjustment” means the difference between PL1 and PL2 where—
PL1 is the profits and losses of the disadvantaged person calculated for tax purposes on the basis of the actual provision, and
PL2 is the profits and losses of the disadvantaged person as (or as they would be) calculated for tax purposes on a claim under section 174.
(4) For the purposes of subsection (3), take PL1 or PL2—
(a) as a positive amount if it is an amount of profits, and
(b) as a negative amount if it is an amount of losses.
(5) In this section, the following expressions have the meaning given by section 195—
“the balancing payment” and “the balancing payments”, and
“the disadvantaged person”.
197 Qualifying conditions for purposes of section 198
(1) Conditions A to F are the qualifying conditions for the purposes of section 198.
(2) Condition A is that one of the affected persons ... has borrowing liabilities.
(3) Condition B is that those liabilities are to any extent the subject of a guarantee provided by a company (“the guarantor company”).
(4) Condition C is that, in calculating the profits and losses of the borrower for tax purposes, the amounts to be deducted in respect of interest or other amounts payable in respect of the borrowing are required to be reduced (whether or not to nil) under section 147(3) or (5).
(5) Condition D is that that reduction is required because of section section 153A.
(6) Condition E is that—
(a) a payment (the “balancing payment”) is made, or
(b) two or more payments (the “balancing payments”) are made,
by the guarantor company to the borrower.
(7) Condition F is that the sole or main reasons for making that payment or those payments are—
(a) that section 147(3) or (5) applies because of section section 153A, or
(b) that sections 192 to 194 apply.
(8) For the purposes of this Chapter, “borrowing” and “guarantee” have the meanings they have in sections 153A and 153B (see section 154).
198 Balancing payments by guarantor to borrower: no charge to, or relief from, tax
(1) If each of the qualifying conditions (see section 197) is met, subsection (2) applies to the balancing payments made by all of the guarantors if, or so far as, the total amount of those payments does not exceed the total amount of the reductions within section 197(4) that are result of the application of section 153A.
(2) Payments to which this subsection applies—
(a) are not to be taken into account in calculating for tax purposes the profits or losses of the guarantor company or companies or the borrower, and
(b) are not for any purpose of the ... Tax Acts to be regarded as distributions.
(3) In this section, the following expressions have the meaning given by section 197—
“the balancing payments”,
“the guarantor company”, and
...
199 Pre-conditions for making election under section 200
(1) Conditions A to E are the pre-conditions for the purposes of section 200.
(2) Condition A is that both of the affected persons are companies.
(3) Condition B is that only one of the affected persons (“the advantaged person”) is a person on whom a potential advantage in relation to United Kingdom taxation is conferred by the actual provision.
(4) Condition C is that the other affected person (“the disadvantaged person”) is within the charge to income tax or corporation tax in respect of profits arising from the relevant activities (see section 216).
(5) Condition D is that the actual provision is provision in relation to borrowing (“the relevant borrowing”).
(6) Condition E is that the capital market condition is met (see section 204).
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
200 Election to pay tax rather than make balancing payments
(1) If each of the pre-conditions (see section 199) is met, the disadvantaged person may make an election—
(a) to make no balancing payment within section 196 to the advantaged person in connection with section 147(3) or (5) applying because of section 153A in relation to the relevant borrowing in a chargeable period, but
(b) instead, to undertake sole responsibility for discharging the advantaged person's liability to tax for that period so far as resulting from section 147(3) or (5) applying because of section 153A in relation to the relevant borrowing.
(2) Section 203 contains provision about the making and effect of elections under this section.
(3) In this section, the following expressions have the meaning given by section 199—
“the advantaged person”,
“the disadvantaged person”, and
“the relevant borrowing”.
201 Pre-conditions for making election under section 202
(1) Conditions A to E are the pre-conditions for the purposes of section 202.
(2) Condition A is that both of the affected persons are companies.
(3) Condition B is that only one of the affected persons (“the advantaged person”) is a person on whom a potential advantage in relation to United Kingdom taxation is conferred by the actual provision.
(4) Condition C is that the other affected person (“the disadvantaged person”) is within the charge to income tax or corporation tax in respect of profits arising from the relevant activities (see section 216).
(5) Condition D is that the actual provision is made or imposed by means of a series of transactions which include—
(a) borrowing (“the relevant borrowing”) by one of the affected persons ..., and
(b) the provision of a guarantee by the other affected person.
(6) Condition E is that the capital market condition is met (see section 204).
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
202 Election, in guarantee case, to pay tax rather than make balancing payments
(1) If each of the pre-conditions (see section 201) is met, the disadvantaged person may make an election—
(a) to make no balancing payment within section 198 to the advantaged person in connection with section 147(3) or (5) applying because of section 153A in relation to the relevant borrowing in a chargeable period, but
(b) instead, to undertake sole responsibility for discharging the advantaged person's liability to tax for that period so far as resulting from section 147(3) or (5) applying because of section 153A in relation to the relevant borrowing.
(2) Section 203 contains provision about the making and effect of elections under this section.
(3) In this section, the following expressions have the meaning given by section 201—
“the advantaged person”,
“the disadvantaged person”, and
“the relevant borrowing”.
(1) In this section “election” means election under section 200 or 202.
(2) An election must be made by being included (whether by amendment or otherwise) in the disadvantaged person's company tax return for the chargeable period in which the relevant borrowing first occurs.
(3) An election is irrevocable.
(4) An election has effect in relation to each of the affected persons for the chargeable period in which the relevant borrowing first occurs and all subsequent chargeable periods.
(5) An election is of no effect if the Commissioners for Her Majesty's Revenue and Customs give the disadvantaged person a notice refusing to accept the election.
(6) A notice under subsection (5) may be given only after a notice of enquiry in respect of the company tax return containing the election has been given to the disadvantaged person.
(Paragraph 24 of Schedule 18 to FA 1998 makes provision about notices of enquiry in respect of company tax returns.)
(7) If an election has effect in relation to an accounting period of the advantaged person, the tax mentioned in subsection (1)(b) of the section under which the election is made—
(a) is recoverable from the disadvantaged person as if it were an amount of corporation tax due and owing from that person, and
(b) is not recoverable from the advantaged person.
(8) In this section—
“the advantaged person”, “the disadvantaged person” and “the relevant borrowing”—
in relation to an election under section 200, have the meaning given by section 199, and
in relation to an election under section 202, have the meaning given by section 201, and
“company tax return” means the return required to be delivered pursuant to a notice under paragraph 3 of Schedule 18 to FA 1998, as read with paragraph 4 of that Schedule.
(9) For the purposes of subsections (2) and (4), if the relevant borrowing first occurred in a chargeable period beginning before 1st April 2004 it is to be treated as if it had first borrowed in the chargeable period beginning on that date.
204 Meaning of “capital market condition” in sections 199 and 201
(1) For the purposes of section 199(6) or 201(6), the capital market condition is met if—
(a) the actual provision forms part of a capital market arrangement,
(b) the capital market arrangement involves the issue of a capital market investment,
(c) the securities that represent the capital market investment are issued wholly or mainly to independent persons, and
(d) the total value of the capital market investments made under the capital market arrangement is at least £50 million.
(2) In this section—
“capital market arrangement” has the same meaning as in section 72B(1) of the Insolvency Act 1986 (see paragraph 1 of Schedule 2A to that Act),
“capital market investment” has the same meaning as in section 72B(1) of the Insolvency Act 1986 (see paragraphs 2 and 3 of Schedule 2A to that Act), and
“independent person” means a person—
who is not the disadvantaged person, and
who does not have a participatory relationship with either of the affected persons.
(3) In subsection (2) “the disadvantaged person”—
(a) for the purposes of the application of this section in relation to section 199(6) has the meaning given by section 199(4), and
(b) for the purposes of the application of this section in relation to section 201(6) has the meaning given by section 201(4).
(4) For the purposes of subsection (2), a person (“A”) who is a company has a “participatory relationship” with one of the affected persons (“B”) if—
(a) one of A and B is directly or indirectly participating in the management, control or capital of the other, or
(b) the same person or persons is or are directly or indirectly participating in the management, control or capital of each of A and B.
205 Provision made or imposed between ring-fence trade and other activities
(1) Subsections (2) to (4) apply if—
(a) a person carries on an oil-related ring-fence trade (see section 206), and
(b) any provision is made or imposed by the person as between—
(i) the oil-related ring-fence trade, and
(ii) any other activities carried on by the person.
(2) Chapters 1 and 3 to 6 (read in accordance with Chapters 2 and 8) apply in relation to the provision as if—
(a) the oil-related ring-fence trade, and the person's other activities, were carried on by two different persons,
(b) the provision were made or imposed as between those two persons by means of a transaction,
(c) those two persons were both controlled by the same person at the time when the provision was made or imposed, and
(d) a potential advantage in relation to United Kingdom taxation were conferred by the provision on each of those two persons.
(3) Subsection (2) has effect subject to subsection (4).
(4) Chapters 1 and 3 to 6 apply in relation to the provision only if the effect of their applying is—
(a) that a larger amount is taken for tax purposes to be the amount of the profits of the oil-related ring-fence trade for any chargeable period, or
(b) that a smaller amount (including nil) is taken for tax purposes to be the amount for any chargeable period of any losses of the oil-related ring-fence trade.
(5) In subsection (4)(a), the reference to a larger amount includes, if there would not otherwise have been profits, an amount of more than nil.
206 Meaning of “oil-related ring-fence trade” in sections 205 and 218
(1) This section has effect for the interpretation of—
(a) section 205, and
(b) in Part 5, section 218(2)(f).
(2) Activities carried on by a person are an “oil-related ring-fence trade” carried on by that person if subsection (3) or (4) applies to the activities.
(3) This subsection applies to the activities if—
(a) they are carried on by the person as part of a trade, and
(b) in accordance with section 16(1) of ITTOIA 2005 or section 279 of CTA 2010 (oil-related activities), they are treated for any tax purposes as a separate trade distinct from all other activities carried on by the person as part of the trade.
(4) This subsection applies to the activities if—
(a) they are carried on by the person as a trade, and
(b) in accordance with section 16(1) of ITTOIA 2005 or section 279 of CTA 2010 they would, if the person did carry on any other activities as part of the trade, be treated for any tax purposes as a separate trade distinct from all other activities carried on by the person as part of the trade.
206A Modification of basic rule where allowances restricted for certain expenditure
(1) This section applies where—
(a) in a case to which section 165A(1) of CAA 2001 (restriction of allowances for decommissioning expenditure) applies, R's available qualifying expenditure is restricted under section 165B(2) or 165C of that Act, or
(b) in a case to which section 416ZC(1) of that Act (restriction of allowances for expenditure on site restoration) applies, R's qualifying expenditure is restricted under section 416ZD(2) or section 165C as applied by section 416ZD(4)(a) of that Act.
(2) In calculating for tax purposes S's profits and losses in relation to the service provided by S to R, the amount which S is required to bring into account is an amount equal to R's expenditure (restricted as mentioned in subsection (1)(a) or (b)).
(3) Section 147(3) and (5) do not apply to the extent that they are inconsistent with subsection (2).
(4) In this section “R” and “S” have the meaning given by section 165A or 416ZC of CAA 2001 (as the case may be).
(1) This Part has effect as follows.
(2) As if a unit trust scheme were a company that is a body corporate.
(3) As if the rights of the unit holders under a unit trust scheme were shares in the company that the scheme is deemed to be.
(4) As if rights and powers of a person in the capacity of a person entitled to act for the purposes of a unit trust scheme were rights and powers of the scheme.
(5) As if provision made or imposed as between—
(a) a person in the capacity of a person entitled to act for the purposes of a unit trust scheme, and
(b) another person,
were made or imposed as between the scheme and that other person.
(1) The appeals within this subsection are—
(a) an appeal under section 31 of, or Schedule 1A to, TMA 1970,
(b) an appeal under paragraph 34(3) of Schedule 18 to FA 1998 against an amendment of a company's return, and
(c) an appeal under paragraph 48 of that Schedule against a discovery assessment or a discovery determination.
(2) Subsection (3) applies so far as the question in dispute on an appeal within subsection (1)—
(a) is or involves a determination of whether this Part has effect, and
(b) relates to any provision made or imposed as between two persons each of whom is within the charge to income tax or corporation tax in respect of profits arising from the relevant activities (see section 216).
(3) If this subsection applies—
(a) each of the persons as between whom the actual provision was made or imposed is entitled to be a party in any proceedings,
(b) the tribunal is to determine the question separately from any other question in the proceedings, and
(c) the tribunal's determination on the question has effect as if made in an appeal to which each of those persons was a party.
(4) In subsection (1)(c)—
“discovery assessment” means a discovery assessment under paragraph 41 of Schedule 18 to FA 1998 (which includes a discovery assessment under that paragraph as applied by paragraph 52 that Schedule), and
“discovery determination” means a discovery determination under paragraph 41 of that Schedule.
(1) Nothing in this Part is to be read as affecting the calculation of the amount of any capital allowance or balancing charge made under CAA 2001.
(2) Subsection (1) does not apply in relation to claims under section 174.
(3) But a claim under section 174 may not be made if the claim would affect the operation of sections 165A to 165E or 416ZC to 416ZE of CAA 2001.
(1) Nothing in this Part is to be read as affecting the calculation in accordance with TCGA 1992 of the amount of any chargeable gain or allowable loss.
(2) Nothing in this Part requires the profits and losses of any person to be calculated for tax purposes as if, in the person's case, instead of income or losses to be brought into account in connection with the taxation of income, there were gains or losses to be brought into account in accordance with TCGA 1992.
(3) Subsections (1) and (2) do not apply in relation to claims under section 174.
215 Manner of making adjustments to give effect to Part
Any adjustments required to be made under this Part may be made by way of discharge or repayment of tax, by the modification of any assessment or otherwise.
(1) In this Part “the relevant activities”, in relation to a person (“A”) who is one of the persons as between whom any provision is made or imposed, means activities that—
(a) are within subsection (2), and
(b) are not within subsection (3).
(2) The activities within this subsection are those of A's activities that comprise the activities in the course of which, or with respect to which, that provision is made or imposed.
(3) The activities within this subsection are any of A's activities carried on—
(a) separately from the activities mentioned in subsection (2), or
(b) for the purposes of a different part of A's business.
(1) References in this Part to a person controlling a body corporate or firm are to be read in accordance with section 1124 of CTA 2010.
(2) Subsection (1) has effect subject to subsection (4) and section 205(2).
(3) Subsection (4) applies if—
(a) the actual provision is made or imposed by or in relation to a sale of oil,
(b) the oil sold is oil which has been, or is to be, extracted under rights exercisable by a company (“the producer”) which, although it may be the seller, is not the buyer, and
(c) at the time of the completion of the sale or when possession of the oil passes, whichever is the earlier, at least 20% of the producer's ordinary share capital is owned directly or indirectly by one or more of the buyer and the companies (if any) that are linked to the buyer.
(4) If this subsection applies, this Part has effect in relation to the actual provision as if—
(a) the buyer and the seller, and
(b) the producer, if it is not the seller,
were all controlled by the same person at the time of the making or imposition of the actual provision.
(5) For the purposes of subsection (3)(c), two companies are “linked” if—
(a) one is under the control of the other, or
(b) both are under the control of the same person or persons.
(6) For the purposes of subsection (3)—
(a) any question whether ordinary share capital is owned directly or indirectly by a company is to be decided as for Chapter 3 of Part 24 of CTA 2010, and
(b) rights to extract oil are to be taken to be exercisable by a company even if they are exercisable by that company only jointly with another company or two or more other companies.
(7) In this section “oil” includes any mineral oil or relative hydrocarbon oil, as well as natural gas.
(8) In this Part persons carrying on a trade, profession or other business in partnership are referred to collectively as a “firm”.
(1) Where a company within the charge to corporation tax has unassessed transfer pricing profits for an accounting period, HMRC may assess those profits to corporation tax in accordance with this Part.
(2) Where the conditions in section 217C(1) are met, corporation tax is charged at the UTPP rate on unassessed transfer pricing profits assessed under this Part (instead of at the main rate or any other rate).
(3) The UTPP rate in relation to profits for an accounting period assessed under this Part means the sum of—
(a) the underlying corporation tax rate, and
(b) 6%.
(4) In subsection (3) “the underlying corporation tax rate”, in relation to an amount of unassessed transfer pricing profits for an accounting period, means the sum of—
(a) the rate at which corporation tax would be chargeable on those profits if the amount of those profits were added to the amount of the company’s profits for the accounting period (which may be nil) on which corporation tax would otherwise be chargeable, and
(b) the percentage given by dividing the total of any amounts that would, ignoring this Part, be assessable or chargeable on the unassessed transfer pricing profits as if they were corporation tax (reduced by any reliefs that would be specific to those amounts) by the amount of the unassessed transfer pricing profits.
(5) Section 217B sets out when a company has unassessed transfer pricing profits and what the amount of those profits are.
(6) Chapter 2 sets out the conditions for a company to be assessed at the UTPP rate under this Part.
(7) Chapter 3 sets out the process to be followed in making an assessment (including provision for a company to be assessed not at the UTPP rate).
(8) Chapter 4 contains minor definitions.
(9) In Schedule A1—
(a) Part 1 sets out when a company has unassessed transfer pricing profits as a partner of a partnership,
(b) Parts 2 and 3 set out how Chapters 2 and 3 of this Part apply in that case, and
(c) Part 4 sets out how Parts 1 to 3 of the Schedule apply to a company as a corporate member of a Lloyd’s syndicate.
(1) For the purposes of this Part, a company has unassessed transfer pricing profits for an accounting period if—
(a) the company has made a self-assessment for the period,
(b) provision has been made or imposed as between the company and another person (referred to in this Part as “the other party”) by means of a transaction or series of transactions,
(c) the profits of the company for the period are subject to a transfer pricing requirement in relation to that provision, and
(d) the transfer pricing requirement was not reflected, or is not wholly reflected, in the company’s self-assessment.
(2) The unassessed transfer pricing profits of the company for the accounting period are—
(a) to the extent that the transfer pricing requirement requires profits that are not reflected in the company’s self-assessment to be brought into account, those profits, and
(b) to the extent that the transfer pricing requirement requires losses that are reflected in the company’s self-assessment to not be brought into account, the profits that would, if they were brought into account, produce the same result as not bringing into account those losses.
(3) For the purposes of subsection (2), the references to profits or losses being brought into account are to profits or losses being brought into account in calculating the company’s profit or loss for the period for corporation tax purposes.
(4) The profits of a company are subject to a transfer pricing requirement in relation to the provision if—
(a) the company’s profits and losses are required to be calculated as if the arm’s length provision (within the meaning of Part 4) had been made or imposed instead of the provision, or
(b) an adjustment to the company’s profits and losses that result from the provision is required by virtue of any other enactment where, but for that enactment, paragraph (a) would have applied in relation to the provision.
(5) In this Part “self-assessment” means a self-assessment under paragraph 7 of Schedule 18 to FA 1998 (and where that assessment has been amended, reference to the self-assessment is to that assessment as amended).
(6) This section does not apply to a company in its capacity as a corporate partner of a partnership or a corporate member of a Lloyd’s syndicate (as to which see Schedule A1) (but this does not prevent this section from otherwise applying in circumstances where a company holds an interest in another person whose profits are treated for the purposes of corporation tax as profits of the company).