Change 1 Article Choose an article Title and introductory text 1 Overview of Act 2 Overview of Part 3 Corporation tax rates 4 Amount of profits to which corporation tax rates applied 5 Basic rule: sterling to be used 6 UK resident company operating in sterling and preparing accounts in another currency 7 UK resident company operating in currency other than sterling and preparing accounts in another currency 8 UK resident company preparing accounts in currency other than sterling 9 Non-UK resident company preparing return of accounts in currency other than sterling 9A Designated currency of a UK resident investment company 9B Period for which an election under section 9A has effect 9C Chargeable gains and losses of companies 10 The equivalent in another currency of a sterling amount 11 Sterling equivalents: basic rule 12 Sterling equivalents: carried-back amounts 13 Sterling equivalents: carried-forward amounts 14 Carried-back amounts 15 Carried-forward amounts 16 Sections 13(2) and 15(5): profit against which carried-forward amount to be set off 17 Interpretation of Chapter 18A Profits charged at the standard small profits rate 18B Marginal relief for companies without ring fence profits 18C Marginal relief for companies with ring fence profits 18D The lower limit and the upper limit 18E Associated companies 18F Section 18E(3): treatment of certain non-trading companies 18G Attribution to persons of rights and powers of their partners 18H Associated companies: fixed-rate preference shares 18I Association through a loan creditor 18J Association through a trustee 18K Power to obtain information 18L Meaning of “augmented profits” 18M Interpretation of section 18L(3) 18N Close investment-holding companies 35 Overview of Part 36 Introduction to Chapter 37 Relief for trade losses against total profits 38 Limit on deduction if accounting period falls partly within 12 month period 39 Terminal losses: extension of periods for which relief may be given 40 Ring fence trades: extension of periods for which relief may be given 41 Sections 39 and 40: transfers of trade to obtain relief 42 Ring fence trades: further extension of period for relief 43 Claim period in case of ring fence or mineral extraction trades 44 Trade must be commercial or carried on for statutory functions 45 Carry forward of pre-1 April 2017 trade loss against subsequent trade profits 45A Carry forward of post-1 April 2017 trade loss against total profits 45B Carry forward of post-1 April 2017 trade loss against trade profits 45C Re-application of section 45A if loss remains after previous application 45D Application of section 45B if loss remains after application of section 45A 45E Re-application of section 45B if loss remains after previous application 45F Terminal losses: relief unrestricted by Part 7ZA and 7A 45G Section 45F: accounting period falling partly within 3 year period 45H Section 45F: transfers of trade to obtain relief 46 Use of trade-related interest and dividends if insufficient trade profits 47 Registered societies 48 Farming or market gardening 49 Reasonable expectation of profit 50 Cessation of trades 51 Companies treated as same person as individual 52 Dealings in commodity futures 53 Leasing contracts and company reconstructions 54 Non-UK resident company: receipts of interest, dividends or royalties 55 Introduction to Chapter 56 Restriction on reliefs for limited partners 57 Meaning of “contribution to the firm” 58 Meaning of “limited partner” 59 Restriction on relief for members of LLPs 60 Meaning of “contribution to the LLP” 61 Unrelieved losses brought forward 62 Relief for losses made in UK property business 63 Company with investment business ceasing to carry on UK property business 64 UK property business to be commercial or carried on for statutory functions 65 UK furnished holiday lettings business treated as trade 66 Relief for losses made in overseas property business 67 Overseas property business to be commercial or carried on for statutory functions 67A EEA furnished holiday lettings business treated as trade 67B Exclusion in the case of property businesses of insurance companies 68 Share loss relief 69 Eligibility conditions 70 Entitlement to claim 71 How relief works 72 Limit on deduction if accounting period falls partly within 12 month period 73 Subscription for shares 74 Disposals of new shares 75 Limits on relief 76 Disposal of shares forming part of mixed holding 77 Section 76: supplementary 78 Qualifying trading companies 79 The trading requirement 80 Ceasing to meet trading requirement because of administration etc 81 The control and independence requirement 82 The qualifying subsidiaries requirement 83 The property managing subsidiaries requirement 84 The gross assets requirement 85 The unquoted status requirement 86 Power to amend requirements by Treasury order 87 Relief after an exchange of shares for shares in another company 88 Substitution of new shares for old shares 89 Deemed time of issue for certain shares 90 Interpretation of Chapter 91 Relief for losses from miscellaneous transactions 92 Loss relief to be reduced if government investment is written off 93 Groups of companies 94 Cases in which government investment is written off 95 Meaning of “carry-forward losses” 96 Interaction with other tax provisions 97 Introduction to Part 98 Overview of Chapter 99 Surrendering of losses and other amounts 100 Meaning of “trading loss” 101 Meaning of “capital allowance excess” 102 Meaning of “UK property business loss” 103 Meaning of “management expenses” 104 Meaning of “non-trading loss on intangible fixed assets” 105 Restriction on surrender of losses etc within section 99(1)(d) to (g) 106 Restriction on losses etc surrenderable by UK resident 107 Restriction on losses etc surrenderable by non-UK resident 108 Meaning of “non-UK profits” 109 Restriction on losses etc surrenderable by dual resident 110 Restriction on surrender of losses etc from alternative finance arrangements 111 Overview of Chapter 112 EEA related definitions 113 Steps to determine extent to which loss etc can be surrendered 114 The equivalence condition 115 The EEA tax loss condition: companies resident in EEA territory 116 The EEA tax loss condition: companies not resident in EEA territory 117 The qualifying loss condition: general 118 The qualifying loss condition: relief for current and previous periods 119 The qualifying loss condition: relief for future periods 120 The qualifying loss condition: non-UK tax relief in another territory 121 The precedence condition 122 Assumptions to be made in recalculating EEA amount 123 Assumptions as to UK residence 124 Assumptions as to places in which activities carried on 125 Assumptions as to accounting periods 126 Assumptions in relation to capital allowances 127 Amounts excluded because of certain arrangements 128 Rules for recalculating EEA amount 129 Overview of Chapter 130 Group relief claims on amounts surrenderable under Chapter 2 131 The group condition 132 Consortium condition 1 133 Consortium conditions 2 and 3 134 Meaning of “UK related” company 134A Companies “established in the EEA” 135 Group relief claims on amounts surrenderable under Chapter 3 136 The EEA group condition 137 Deduction from total profits 138 Limitation on amount of group relief applying to all claims 139 Unused part of the surrenderable amounts 140 Unrelieved part of claimant company's available total profits 141 Sections 139 and 140: supplementary 142 Meaning of “the overlapping period” 143 Condition 1: surrendering company owned by consortium 144 Condition 1: claimant company owned by consortium 145 Conditions 2 and 3: limitations in sections 143 and 144 146 Conditions 2 and 3: companies in link company's group 146A Conditions 1 and 2: surrendering company not controlled by claimant company etc 146B Conditions 1 and 3: claimant company not controlled by surrendering company etc 147 Conditions 1 and 2: surrenderable amounts including trading loss 148 Conditions 1 and 2: surrendering company in group of companies 149 Conditions 1 and 3: claimant company in group of companies 150 Overview of Chapter 151 Meaning of “75% subsidiary” and “90% subsidiary” 152 Groups of companies 153 Companies owned by consortiums and members of consortiums 154 Arrangements for transfer of member of group of companies etc 155 Arrangements for transfer of company owned by consortium etc 155A Certain arrangements not within sections 154 and 155 155B Certain mortgage arrangements not within sections 154 and 155 156 Sections 154 and 155: supplementary 157 Introduction to Chapter 158 Meaning of “equity holder” 159 Use of relevant company's assets 160 Meaning of “ordinary shares” 161 Meaning of “restricted right to dividends” 162 Meaning of “normal commercial loan” 163 Normal commercial loans: company's results or value of assets 164 Sections 160 and 162: supplementary 164A Loan forming part of tier two capital 165 Proportion of profits available for distribution to which company is entitled 166 Proportion of assets available for distribution to which company is entitled 167 Profits or assets available for distribution and entitlement: supplementary 168 Meaning of “the relevant accounting period” 169 Application and interpretation of sections 170 to 182 170 Shares or securities with limited rights 171 Shares or securities with temporary rights 172 Company A's proportion if shares etc have temporary rights 173 Cases in which option arrangements are in place 174 Company A's proportion if option arrangements in place 174A Certain option arrangements not within section 173 174B Certain mortgage arrangements not within section 173 175 Cases in which both sections 170 and 172 apply 176 Cases in which both sections 170 and 174 apply 177 Cases in which both sections 172 and 174 apply 178 Cases in which sections 170, 172 and 174 all apply 179 Cases in which surrendering or claimant company is non-UK resident 180 Company A's proportion if non-UK resident involved 181 Assumptions to be applied if non-UK resident company involved 182 Assets etc referable to UK trade 183 Payments for group relief 184 References to “allowance” in CAA 2001 185 “Trading company” and “holding company” 186 When activities of a company are double taxation exempt 187 “Non-UK tax” 188 Other definitions 188AA Introduction to Part 188BA Overview of Chapter 188BB Surrender of carried-forward losses and other amounts 188BC Restriction on surrendering pre-1 April 2017 losses etc 188BD Restriction where investment business has become small or negligible 188BE Restriction where surrendering company could use losses etc itself 188BF Restriction where surrendering company has no income-generating assets 188BG Restrictions for certain insurance companies 188BH Restriction on surrender of losses etc made when UK resident 188BI Restriction on surrender of losses made when non-UK resident 188BJ Restriction on surrender losses etc made when dual resident 188CA Overview of Chapter 188CB Claims in relation to all the surrenderable amounts 188CC Claims in relation to the surrenderable amounts that are attributable to a specified accounting period 188CD Claim not allowed by company with unused carried-forward losses of its own 188CE The group condition 188CF Consortium condition 1 188CG Consortium condition 2 188CH Consortium condition 3 188CI Consortium condition 4 188CJ Meaning of “UK related” company 188CK Deductions from total profits 188DA Overview 188DB Limitation on amount of relief applying to all claims under section 188CB 188DC Unused part of the surrenderable amounts 188DD Claimant company's relevant maximum for overlapping period 188DE Previously claimed group relief for carried-forward losses 188DF Sections 188DC to 188DE: supplementary 188DG Sections 188DC and 188DE: meaning of “the overlapping period” 188DH Condition 1: ownership proportion 188DI Condition 2: ownership proportion 188DJ Condition 2: companies in link company's group 188DK Conditions 1 and 2: claimant company not controlled by surrendering company etc 188DL Conditions 1 and 2: claimant company in group of companies 188EA Overview of Chapter 188EB Limitation on amount of relief applying to all claims under section 188CC 188EC Unused part of surrenderable amounts attributable to specified loss-making period 188ED Claimant company's relevant maximum for the overlapping period 188EE Previously claimed group relief for carried-forward losses 188EF The potential Part 5 group relief amount 188EG Sections 188EC to 188EE: supplementary 188EH Sections 188EC and 188EE: meaning of “the overlapping period” 188EI Condition 4: companies in link company's group 188EJ Condition 3 or 4: surrendering company not controlled by claimant company etc 188EK Condition 3 or 4: surrendering company in group of companies 188FA Payments for group relief for carried-forward losses 188FB Subsidiaries, groups and consortiums 188FC “Trading company” and “holding company” 188FD Other definitions 189 Relief for qualifying charitable donations 190 Qualifying charitable donations: meaning 191 Qualifying payments 192 Condition as to repayment 193 Associated acquisition etc 194 Distributions 195 Associated benefits 196 Associated benefits: meaning 197 Restrictions on associated benefits 198 Payments and benefits linked to periods of less than 12 months 199 Payment attributed to earlier accounting period 200 Company wholly owned by a charity 201 Associated persons 202 “Charity” 202A “Registered club” 202B Restriction on relief for payments to community amateur sports clubs 202C “Inflated member-related expenditure” 203 Certain disposals of investments 204 Meaning of qualifying investment 205 Meaning of qualifying interest in land 206 The relievable amount 207 Incidental costs of making disposal 208 Consideration 209 Value of net benefit to charity 210 Market value of qualifying investments 210A Acquisition value of qualifying investments 211 Meaning of “disposal-related obligation” 212 Meaning and amount of “disposal-related liability” 213 Certificate required from charity 214 Qualifying interests in land held jointly 215 Calculation of relievable amount etc where joint disposal of interest in land 216 Disqualifying events 217 “Charity” 217A Relief for expenditure on grassroots sport 217B Meaning of qualifying expenditure on grassroots sport 217C Meaning of qualifying sport body 217D Relationship between this Part and Part 6 218 Meaning of “CITR” 219 Eligibility for CITR 220 Form and amount of CITR 220A Carry forward of CITR 220B Limit on State aid 221 Meaning of “making an investment” 222 Determination of “the invested amount” 223 Meaning of “the 5 year period” and “the investment date” 224 Overview of other Chapters of Part 225 Qualifying investments: introduction 226 Conditions to be met in relation to loans 227 Conditions to be met in relation to securities 228 Conditions to be met in relation to shares 229 Tax relief certificates 230 No pre-arranged protection against risks 231 No control of CDFI by investor 232 Investor must have beneficial ownership 233 Investor must not be accredited 234 No acquisition of share in partnership 235 No tax avoidance purpose 236 Loans: no claim after disposal or excessive repayments or receipts of value 237 Securities or shares: no claim after disposal or excessive receipts of value 238 No claim after loss of accreditation by the CDFI 239 Accreditation of investor 240 Attribution: general 241 Attribution: bonus shares 242 Introduction to Chapter 243 Disposal of loan during 5 year period 244 Disposal of securities or shares during 5 year period 245 Repayment of loan capital during 5 year period 246 Value received by investor during 6 year period: loans 247 Value received by investor during 6 year period: securities or shares 248 Receipts of insignificant value to be added together 249 When value is received 250 The amount of value received 251 Value received if there is more than one investment 252 Effect of receipt of value on future claims 253 Receipts of value by or from connected persons 254 CITR subsequently found not to have been due 255 Manner of withdrawal or reduction of CITR 256 Meaning of “loan” and “interest” 257 Purchase and resale arrangements 258 Deposit arrangements 259 Profit share agency arrangements 260 Information to be provided by the investor 261 Disclosure 262 Nominees 263 Application for postponement of tax pending appeal 264 Identification of securities or shares on a disposal 265 Meaning of “issue of securities or shares” 266 Meaning of “disposal” 267 Construction of references to being “held continuously” 268 Meaning of “associate” 269 Minor definitions etc 269ZA Overview of Part 269ZB Restriction on deductions from trading profits 269ZBA Restriction on deductions from chargeable gains 269ZC Restriction on deductions from non-trading profits 269ZD Restriction on deductions from total profits 269ZDA References to a company’s “deductions allowance” 269ZE Restriction on deductions from total profits: insurance companies 269ZF “Relevant trading profits”, “total relevant non-trading profits” etc 269ZFA “Relevant profits” 269ZFB Modifications for certain insurance companies 269ZFC Restriction on deductions of non-BLAGAB allowable losses from BLAGAB chargeable gains 269ZG General insurance companies: excluded accounting periods 269ZH “Insolvency procedures” 269ZI “Qualifying latent claims” 269ZJ Exclusion of shock losses from restrictions 269ZK Meaning of “shock loss”: requirement to make a claim 269ZL Further provision about claims under section 269ZK 269ZM Meaning of “solvency shock period” 269ZN Determination of shock loss threshold 269ZO Calculation of solvency loss 269ZP Interpretation of sections 269ZJ to 269ZO 269ZQ Power to amend 269ZR Deductions allowance for company in a group 269ZS Group deductions allowance and the nominated company 269ZSA Group allowance nomination: former groups 269ZT Group allowance allocation statement: submission 269ZU Group allowance allocation statement: submission of revised statement 269ZV Group allowance allocation statement: requirements and effects 269ZVA Group allowance allocation statement: former groups 269ZW Deductions allowance for company not in a group 269ZWA Increase of deductions allowance for insolvent companies 269ZX Increase of deductions allowance in connection with onerous or impaired leases 269ZY Meaning of “relevant reversal credit” 269ZYZA Other relevant credits 269ZYA Deductions allowance for company without a source of chargeable income 269ZYB Provisional application of section 269ZYA 269ZZ Company tax return to specify amount of deductions allowance 269ZZA Excessive specifications of deductions allowance 269ZZB Meaning of “group” 269A Overview of Part 269B Meaning of “banking company” 269BA Excluded entities 269BB Relevant regulated activities 269BC Banking companies: supplementary definitions 269BD Meaning of “group” 269BE Powers to amend 269C Overview of Chapter 269CA Restriction on deductions for trading losses 269CB Restriction on deductions for non-trading deficits from loan relationships 269CC Restriction on deductions for management expenses etc 269CD Relevant profits 269CE Losses arising before company began banking activity 269CF Losses arising in company's start-up period 269CG The “start-up period” 269CH Losses covered by carried-forward loss allowance 269CI Allocation of carried-forward loss allowance within a group 269CJ Re-allocation of carried-forward loss allowance 269CK Profits arising from tax arrangements to be disregarded 269CL When a company first begins to carry on relevant regulated activities 269CM Joint venture companies 269CN Other definitions 269D Overview of Chapter 269DA Surcharge on banking companies 269DB Meaning of “non-banking group relief” 269DBA Meaning of “non-banking group relief for carried-forward losses” 269DC Meaning of “non-banking or pre-2016 loss relief” 269DCA Meaning of “non-banking transferred-in loss relief” 269DD Meaning of “relevant transferred-out gain” and “non-banking transferred-in gain” 269DE Surcharge allowance for banking company in a group containing other banking companies 269DF Group surcharge allowance and the nominated company 269DG Group allowance allocation statement: submission 269DH Group allowance allocation statement: submission of revised statement 269DI Group allowance allocation statement: requirements and effect 269DJ Surcharge allowance for company not in a group containing other banking companies 269DK Excessive specifications of available surcharge allowance 269DL Application of enactments applying to corporation tax: assessment, recovery, double taxation etc 269DM Payments in respect of the surcharge: information to be provided 269DN Profit and loss shifting to avoid or reduce surcharge liability 269DO Interpretation 270 Overview of Part 271 “Associated companies” 272 “Oil extraction activities” 273 “Oil rights” 274 “Oil-related activities” 275 “Ring fence income” 276 “Ring fence profits” 277 “Ring fence trade” 278 Other definitions 279 Oil-related activities treated as separate trade 279A Corporation tax rates on ring fence profits 279B Company with only ring fence profits 279C Company with ring fence profits and other profits 279D The ring fence amount 279DA The remaining amount 279E The lower limit and the upper limit 279EA Interpretation etc 279F “Related 51% group company” 279G “Augmented profits” 279H Interpretation of section 279G(3) and (4) 280 Disposal to be valued by reference to section 2(5A) of OTA 1975 281 Valuation where market value taken into account under section 2 of OTA 1975 282 Valuation where disposal not sale at arm's length 283 Valuation where excess of nominated proceeds 284 Valuation where relevant appropriation but no disposal 285 Valuation where appropriation to refining etc 285A Restriction on hire etc of relevant assets to be brought into account 286 Restriction on debits to be brought into account 287 Restriction on credits to be brought into account 287A Restriction where debits or credits relate to decommissioning security settlement 288 Sale and lease-back 289 Reduction of expenditure by reference to regional development grant 290 Adjustment as a result of regional development grant 291 Tariff receipts etc 291A Meaning of “tariff receipt” 291B Tariff receipts: counteraction of avoidance arrangements 292 Expenditure on abandonment guarantees 293 Relief for reimbursement expenditure under abandonment guarantees 294 Payment under abandonment guarantee not immediately applied 295 Amounts excluded from section 293(1) 296 Introduction to section 297 297 Relief for expenditure incurred by a participator in meeting defaulter's abandonment expenditure 298 Reimbursement by defaulter in respect of certain abandonment expenditure 298A Receipts arising from decommissioning 299 Deduction of PRT in calculating income for corporation tax purposes 300 Effect of repayment of PRT: general rule 301 Effect of repayment of PRT: special rule 302 Interest on repayment of PRT or APRT 303 Management expenses 303A Introduction to sections 303B to 303D: post-1 April 2017 non-decommissioning losses of ring fence trades 303B Carry forward of losses against subsequent profits 303C Excess carried forward losses: relief against total profits 303D Further carry forward against subsequent profits of loss not fully used 304 Losses 305 Group relief and group relief for carried-forward losses 306 Capital allowances 307 Overview of Chapter 308 Qualifying companies 309 Accounting periods 310 The relevant percentage 311 Limit on number etc of accounting periods for which supplement may be claimed 312 Qualifying pre-commencement expenditure 313 Unrelieved group ring fence profits for accounting periods 314 Taxable ring fence profits for an accounting period 315 Supplement in respect of a pre-commencement accounting period 316 The mixed pool of qualifying pre-commencement expenditure and supplement previously allowed 317 Reduction in respect of disposal receipts under CAA 2001 318 Reduction in respect of unrelieved group ring fence profits 318A Adjustment of pool to remove pre-2013 expenditure after the initial 6 periods 319 The reference amount for a pre-commencement period 320 Claims for pre-commencement supplement 321 Supplement in respect of a post-commencement period 322 Amount of post-commencement supplement for a post-commencement period 323 Ring fence losses 324 Special rule for straddling periods 325 The pool of ring fence losses and the pool of non-qualifying Schedule 19B losses 326 The ring fence pool 327 Reductions in respect of relief for carried-forward ring fence losses 328 Reductions in respect of unrelieved group ring fence profits 328A Adjustment of pool to remove pre-2013 losses after the initial 6 periods 329 The reference amount for a post-commencement period 330 Supplementary charge in respect of ring fence trades 330ZA Ordering of allowances 330A Decommissioning expenditure taken into account in calculating ring fence profits 330B Decommissioning expenditure taken into account for PRT purposes 330C Meaning of “decommissioning expenditure” 331 Meaning of “financing costs” etc 332 Assessment, recovery and postponement of supplementary charge 332A Overview 332B Meaning of “qualifying oil field” 332BA Meaning of “investment expenditure” 332C Generation of investment allowance 332CA Expenditure incurred before field is determined 332D Expenditure on acquisition of asset: disqualifying conditions 332DA Restriction where field qualified for field allowance as new field 332DB Restriction where project in additionally-developed field qualified for field allowance 332DC Restriction relating to fields qualifying for onshore allowance 332E Reduction of adjusted ring fence profits 332EA Carrying forward of activated allowance 332F Activation of allowance: no change of equity share 332FA The closing balance of unactivated allowance for an accounting period 332FB Activation limit for former additionally-developed fields 332FC Carrying forward of unactivated allowance 332G Reference periods 332H Activation of allowance: reference periods 332HA Unactivated amounts attributable to a reference period 332HB Carry-forward of unactivated allowance from a reference period 332I Introduction to sections 332IA and 332IB 332IA Reduction of allowance if equity is disposed of 332IB Acquisition of allowance if equity acquired 332J Adjustments 332JA Regulations amending specified percentages 332K When expenditure is incurred 332KA Other definitions 356B Overview 356BA “Onshore oil-related activities” 356BB The activities 356BC “Site” 356C Generation of onshore allowance 356CA Disqualifying conditions for section 356C(4)(b) 356CAA Expenditure on acquisition of asset: further disqualifying conditions 356CB Expenditure not related to an established site 356D Reduction of adjusted ring fence profits 356DA Carrying forward of activated allowance 356DB Companies with both field allowances and onshore allowance 356E Activation of allowance: no change of equity share 356EA The closing balance of unactivated allowance for an accounting period 356EB Carrying forward of unactivated allowance 356F Transfer of allowances between sites 356G Introduction to sections 356GA to 356GD 356GA Reference periods 356GB Activation of allowance: reference periods 356GC Carry-forward of unactivated allowance from a reference period 356GD Unactivated amounts attributable to a reference period 356H Introduction to sections 356HA and 356HB 356HA Reduction of allowance if equity disposed of 356HB Acquisition of allowance if equity acquired 356I Adjustments 356IA Orders 356IB “Authorisation of development”: oil fields 356J “Authorisation of development”: drilling and extraction sites 356JA When capital expenditure is incurred 356JB Other definitions 356JC Overview 356JD Meaning of “cluster area” 356JDA Meaning of “previously authorised oil field” 356JE Meaning of “investment expenditure” 356JF Generation of cluster area allowance 356JFA Expenditure on acquisition of asset: disqualifying conditions 356JG Reduction of adjusted ring fence profits 356JGA Carrying forward of activated allowance 356JH Activation of allowance: no change of equity share 356JHA The closing balance of unactivated allowance for an accounting period 356JHB Carrying forward of unactivated allowance 356JI Reference periods 356JJ Activation of allowance: reference periods 356JJA Unactivated amounts attributable to a reference period 356JJB Carry-forward of unactivated allowance from a reference period 356JK Disposal of equity share: transfer of allowance 356JKA More than one disposal on a single day 356JKB Effect of transfer of allowance for transferee 356JL Use of allowance attributable to unlicensed area 356JM Adjustments 356JMA Regulations amending percentage in section 356JF(2) 356JN When capital expenditure is incurred 356JNA Licensed sub-areas 356JNB Other definitions 356K Overview of Part 356L “Oil contractor activities” etc 356LA “Relevant asset” 356LB “Associated person” 356LC “Lease” 356LD “Contractor's ring fence profits” 356M Oil contractor activities treated as separate trade 356N Restriction on hire etc of relevant assets to be brought into account 356NA Restriction on hire: further provision 356NB Restriction on debits to be brought into account 356NC Restriction on credits to be brought into account 356ND Management expenses 356NE Losses 356NF Group relief and group relief for carried-forward losses 356NG Capital allowances 356NH Restriction on deductions from contractor's ring fence profits 356NI Deductions allowances where company has contractor's ring fence profits 356NJ Modification of provisions restricting the use of losses 356OA Overview of Part 356OB Disposals of land in the United Kingdom 356OC Disposals of land: profits treated as trading profits 356OD Disposals of property deriving its value from land in the United Kingdom 356OE Disposals within section 356OD: profits treated as trading profits 356OF Profits and losses 356OG The chargeable company 356OH Fragmented activities 356OI Calculation of profit or gain on disposal 356OJ Apportionments 356OK Arrangements for avoiding tax 356OL Profits attributable to period before relevant activities etc began 356OM Tracing value 356ON Relevance of transactions, arrangements, etc 356OO “Another person” 356OP “Arrangement” 356OQ “Disposal” 356OR “Land” and related expressions 356OS References to realising a gain 356OT Related parties 357A Election for special treatment of profits from patents etc 357B Meaning of “qualifying company” 357BA Meaning of “exclusive licence” 357BB Rights to which this Part applies 357BBA Rights to which this Part applies: EU rights 357BC The development condition 357BD Meaning of “qualifying development” 357BE The active ownership condition 357BF Relevant IP profits 357BG Finance income 357BH Relevant IP income 357BHA Notional royalty 357BHB Excluded income 357BHC Mixed sources of income 357BI Excluded debits 357BIA Certain amounts not to be deducted from sub-streams at Step 4 of section 357BF 357BJ Routine return figure 357BJA Routine deductions 357BJB Deductions that are not routine deductions 357BK Marketing assets return figure 357BKA Notional marketing royalty 357BKB Actual marketing royalty 357BL Introduction 357BLA The R&D fraction 357BLB Qualifying expenditure on relevant R&D undertaken in-house 357BLC Qualifying expenditure on relevant R&D sub-contracted to unconnected persons 357BLD Qualifying expenditure on relevant R&D sub-contracted to connected persons 357BLE Qualifying expenditure on acquisition of relevant qualifying IP rights 357BLEA Cases where the company is a party to a CSA 357BLF Meaning of the “relevant period” etc 357BLG Cases where the company is a new entrant with insufficient information about pre-enactment expenditure 357BLH R&D fraction: increase for exceptional circumstances 357BM Profits arising before grant of right 357BN Small claims treatment 357BNA Notional royalty election 357BNB Small claims figure election 357BNC Global streaming election 357BO Relevant IP profits 357BP Meaning of “new qualifying IP right” and “old qualifying IP right” 357BQ The modifications 357C Relevant IP profits 357CA Total gross income of a trade 357CG Adjustments in calculating profits of trade 357CH Shortfall in R&D expenditure 357CHA Shortfall in qualifying expenditure 357CI Routine return figure 357CJ Routine deductions 357CK Deductions that are not routine deductions 357CL Companies eligible to elect for small claims treatment 357CM Small claims amount 357CN Marketing assets return figure 357CO Notional marketing royalty 357CP Actual marketing royalty 357CQ Profits arising before grant of right 357D Alternative method of calculating relevant IP profits: “streaming” 357DA Relevant IP profits 357DB Method of allocation 357DC The mandatory streaming conditions 357E Company with relevant IP losses: set-off amount 357EA Effect of set-off amount on company with more than one trade 357EB Allocation of set-off amount within a group 357EC Carry-forward of set-off amount 357ED Company ceasing to carry on trade, etc 357EE Transfer of a trade between group members 357EF Payments between group members in consequence of section 357EB 357F Licences conferring exclusive rights 357FA Incorporation of qualifying items 357FB Tax advantage schemes 357G Making of election under section 357A(1) or (11)(b) 357GA Revocation of election made under section 357A(1) 357GB Application of this Part in relation to partnerships 357GC Meaning of “cost-sharing arrangement 357GCZA Qualifying IP right held by another party to CSA 357GCZB Exclusive licence held by another party to CSA 357GCZC R&D undertaken or contracted out by another party to CSA 357GCZD Acquisition of qualifying IP rights etc by another party to CSA 357GCZE Treatment of expenditure in connection with formation of CSA etc 357GCZF Treatment of income in connection with formation of CSA etc 357GCA Application of this Part in relation to transferred trades 357GD Meaning of “group” 357GE Other interpretation 357H Introduction 357I The Northern Ireland rate 357IA Power of Northern Ireland Assembly to set Northern Ireland rate 357J Introductory 357JA Profits chargeable to corporation tax and rates 357JB Availability of relief 357JC Restriction on deductions 357JD Availability of relief 357JE Restriction on deductions 357JF Availability of relief 357JG Restriction on deductions 357JH Modifications of Chapter 4 of Part 5 357JHA Availability of relief 357JHB Restriction on deductions 357JHC Modifications of Chapter 4 of Part 5A 357JHD Modifications of Chapter 5 of Part 5A 357JI Transfers of trade without a change of ownership 357JJ Restricted deduction: Northern Ireland rate lower than main rate 357K Application of Chapter 357KA “Northern Ireland company” 357KB “Qualifying trade” 357KC “SME” 357KD “Northern Ireland employer” 357KE Northern Ireland workforce conditions 357KEA “Disqualified close company” 357L Northern Ireland regional establishments of companies 357LA Agent of independent status 357LB Alternative finance arrangements 357LC The independent broker condition 357LD The independent investment manager conditions 357LE Investment managers: the 20% rule 357LF Section 357LE: interpretation 357LG Application of 20% rule to collective investment schemes 357LH Meaning of “investment manager” and “investment transaction” 357LI Lloyd's agents 357LJ Investment managers: disregard of certain chargeable profits 357LK Miscellaneous 357M Introductory 357MA Northern Ireland profits or losses and mainstream profits or losses 357MB Profit imputed to back-office activities 357N Introductory 357NA Northern Ireland profits or losses and mainstream profits or losses 357NB Profit imputed to Northern Ireland back-office activities 357NC The separate enterprise principle 357ND Transactions treated as being on arm's length terms 357NE Provision of goods or services for NIRE 357NF Allowable deductions 357NG Deductions attributable to the NIRE for costs 357NH Payments and receipts in respect of intangible assets 357NI Interest or other financing costs and receipts 357NJ Losses 357NK Trade includes office 357O Introductory 357OA Rules affecting calculation of Northern Ireland profits or losses 357OB Northern Ireland intangibles credits and debits: SMEs that are Northern Ireland employers 357OC Northern Ireland intangibles credits and debits: SMEs that are not Northern Ireland employers and large companies 357OD “Realisation credit” and “realisation debit” 357OE The Northern Ireland element of a realisation credit or debit 357OF Northern Ireland element: general rule 357OG Northern Ireland element: credits where roll-over relief involved 357OH Pre-commencement asset 357OI Goodwill 357OJ Assets representing production expenditure on films 357OK Fungible assets 357OL Realisation and acquisition of fungible assets 357OM Assets whose value derives from pre-commencement assets 357ON The pre-commencement status conditions 357OO Assets acquired in connection with disposals of pre-commencement assets 357OP Interpretation of Chapter 357P Introduction and interpretation 357PA R&D expenditure credit ... 357PB Additional deduction under section 1044 of CTA 2009 357PC Tax credit under section 1054 of CTA 2009: entitlement 357PD Tax credit under section 1054 of CTA 2009: amount of tax credit 357PE Restriction on losses carried forward where tax credit claimed 357PF Additional deduction under section 1087 of CTA 2009 357Q Introduction and interpretation 357QA Additional deduction 357QB Tax credit: entitlement 357QC Tax credit: amount of tax credit 357QD Restriction on losses carried forward where tax credit claimed 357QE Application and interpretation 357QF Expenditure credit to count towards mainstream profits or losses 357QG Carrying forward of production losses 357QH Transfer of terminal loss 357R Introduction and interpretation 357RA Northern Ireland additional deduction 357RB Northern Ireland supplementary deduction 357RC Northern Ireland supplementary deduction: amount 357RD Film tax credit: Northern Ireland supplementary deduction ignored 357RE Artificially inflated claims for additional deduction 357RF Restriction on use of losses while film is in production 357RG Use of losses in later periods 357RH Terminal losses 357S Introduction and interpretation 357SA Northern Ireland additional deduction 357SB Northern Ireland supplementary deduction 357SC Northern Ireland supplementary deduction: amount 357SD Tax credit: Northern Ireland supplementary deduction ignored 357SE Artificially inflated claims for additional deduction 357SF Restriction on use of losses while programme in production 357SG Use of losses in later periods 357SH Terminal losses 357T Introduction and interpretation 357TA Northern Ireland additional deduction 357TB Northern Ireland supplementary deduction 357TC Northern Ireland supplementary deduction: amount 357TD Tax credit: Northern Ireland supplementary deduction ignored 357TE Artificially inflated claims for additional deduction 357TF Restriction on use of losses while video game in development 357TG Use of losses in later periods 357TH Terminal losses 357U Introduction and interpretation 357UA Northern Ireland additional deduction 357UB Northern Ireland supplementary deduction 357UC Northern Ireland supplementary deduction: amount 357UD Tax credit: Northern Ireland supplementary deduction ignored 357UE Transactions not entered into for genuine commercial reasons 357UF Restriction on use of losses before completion period 357UG Use of losses in the completion period 357UH Terminal losses 357UI Provisional entitlement to relief 357UJ Introduction and interpretation 357UK Northern Ireland additional deduction 357UL Northern Ireland supplementary deduction 357UM Northern Ireland supplementary deduction: amount 357UN Orchestra tax credit: Northern Ireland supplementary deduction ignored 357UO Restriction on use of losses before completion period 357UP Use of losses in the completion period 357UQ Terminal losses 357UR Introduction and interpretation 357US Northern Ireland additional deduction 357UT Northern Ireland supplementary deduction 357UU Northern Ireland supplementary deduction: amount 357UV Museums and galleries exhibition tax credit: Northern Ireland supplementary deduction ignored 357UW Restriction on use of losses before completion period 357UX Use of losses in the completion period 357UY Terminal losses 357V Introductory 357VA Modification of section 357A 357VB Relevant Northern Ireland IP profits: SMEs that are Northern Ireland employers 357VC Relevant Northern Ireland IP profits: SMEs that are not Northern Ireland employers and large companies 357VD Relevant IP losses 357VE Interpretation of Chapter 357W Introductory 357WA Meaning of “Northern Ireland firm” 357WB Meaning of “qualifying partnership trade” 357WBA Northern Ireland workforce partnership conditions 357WBB Section 357WBA: supplementary 357WBC “Disqualified firm” 357WC Northern Ireland profits etc of firm determined under Chapter 6 357WD Northern Ireland profits etc of firm determined under Chapter 7 357WE Sections 357WC and 357WD: interpretation 357WF Application of section 747 of CTA 2009 to Northern Ireland firm 357WG Application of Part 8A to Northern Ireland firm 357WH Allocation of Northern Ireland profits etc of firm to company 357X Introduction 357XA Oil activities 357XB Lending and investment 357XC Investment management 357XD Insurance: long-term business 357XE Re-insurance trade 357XF Re-insurance activity 357XG Exploration and exploitation of UK sector of continental shelf 357XH Power to amend definition of “excluded trade” or “excluded activity” 357XI Power to make provision about meaning of “back-office activities” 357YA Charge to corporation tax on restitution interest 357YB Restitution interest chargeable as income 357YC Meaning of “restitution interest” 357YD Further provision about amounts included, or not included, in “restitution interest” 357YDA Life insurance companies: amounts representing policyholder income 357YE Period in which amounts are to be brought into account 357YF Companies without GAAP-compliant accounts 357YG Restitution interest: appeals made out of time 357YH Countering effect of avoidance arrangements 357YI Interpretation of section 357YH 357YJ Examples of results that may indicate exclusion not applicable 357YK Corporation tax rate on restitution interest 357YL Exclusion of reliefs, set-offs etc 357YM Assignment of rights to person not chargeable to corporation tax 357YN Migration of company with claim to restitution interest 357YNA Transfer of rights: restitution interest arising after a winding up or dissolution 357YNB Meaning of “related company” 357YO Duty to deduct tax from payments of restitution interest 357YP Treatment of amounts deducted under section 357YO 357YQ Assessment of tax chargeable on restitution interest 357YR Interest on excessive amounts withheld 357YS Appeal against deduction 357YT Amounts taxed at restitution payments rate to be outside instalment payments regime 357YU Interpretation 357YV Relationship of Part with other corporation tax provisions 357YW Power to amend 358 Introduction to Part 359 Overview of Chapter 360 Lessor under long funding finance lease: rental earnings 361 Lessor under long funding finance lease: exceptional items 362 Lessor under long funding finance lease making termination payment 363 Lessor under long funding operating lease: periodic deduction 364 “Starting value”: general 365 “Starting value” where plant or machinery originally unqualifying 366 Long funding operating lease: lessor's additional expenditure 367 Determination of remaining residual value resulting from lessor's first additional expenditure 368 Determination of remaining residual value resulting from lessor's further additional expenditure 369 Lessor under long funding operating lease: termination of lease 370 Plant or machinery held as trading stock 371 Adjustments where sections 360 to 369 subsequently disapplied by section 370 372 Lessor also lessee under non-long funding lease 373 Other avoidance 374 Provision supplementing section 373 375 Adjustments where sections 360 to 369 subsequently disapplied by section 373 376 Films 377 Lessee under long funding finance lease: limit on deductions 377A Lessee under long funding finance leases: right-of-use leases 378 Lessee under long funding finance lease: termination 379 Lessee under long funding operating lease 380 “Starting value” in section 379 381 Interpretation of Chapter 382 Introduction to Chapter 383 Income and matching expense in different accounting periods 384 Amount of income and expense 385 No carry back of loss against the income 386 Relief for expense otherwise giving rise to carried forward loss 387 “Business of leasing plant or machinery” 388 “Relevant plant or machinery value” for condition A in section 387 389 Provision supplementing section 388 390 Relevant plant or machinery value where relevant company lessee under long funding lease etc 391 Relevant company's income for condition B in section 387 392 “Relevant change in relationship” 393 Qualifying 75% subsidiaries 394 Consortium relationships 394ZA Company joining tonnage tax group 394A “Qualifying change of ownership” 395 No qualifying change of ownership in certain intra-group reorganisations 396 No qualifying change of ownership where principal company's interest in consortium company unchanged 397 Companies owned by consortiums and members of consortiums 398 “Qualifying 75% ... subsidiary” etc 398A Election out of qualifying change of ownership 398B The election 398C Special treatment of A's trade or business that includes leasing 398D Restrictions on use of losses etc 398E Restriction on artificial losses or reductions in profits 398F Limit on availability of capital allowances to A 398G Transfers into and out of A 399 The amount of the income: the basic amount 400 “PM” in section 399 401 Provisions supplementing section 400 402 “PM” where relevant company lessee under long funding lease etc 403 “TWDV” in section 399 404 Amount to be nil if basic amount negative 405 Adjustment to the basic amount: qualifying 75% subsidiaries 406 Adjustment to the basic amount: consortium relationships 407 Migration 408 “Associated company” 409 Introduction to Chapter 410 “Business of leasing plant or machinery” 411 “Relevant plant or machinery value” for condition A in section 410 412 Provision supplementing section 411 413 Relevant plant or machinery value where partnership lessee under long funding lease etc 414 Partnership's income for condition B in section 410 415 “Qualifying change” in company's interest in a business 416 Determining the percentage share in the profits or loss of business 417 Partner company's income and other companies' matching expense 418 Amount of income and expense 419 Relief for expense otherwise giving rise to carried forward loss 420 Exception: companies carrying on business ceasing to share in its profits 421 The amount of the income: the basic amount 422 Amount to be nil if basic amount negative 423 Adjustment to the basic amount 424 The amount of expense 425 Partner company's income and matching expense in different accounting periods 426 Amount of income and expense 427 No carry back of loss against the income 428 Relief for expense otherwise giving rise to carried forward loss 429 The amount of the income 430 “Associated company” 431 “Profits” and “loss” 432 Restrictions on relief for Chapter 3 or 4 expenses: introduction 433 Restrictions applying to the restricted loss amount 433A Restrictions not applying to the restricted loss amount 434 Introduction to sections 435 and 436 435 Disregard of increases and decreases in certain amounts 436 Balance sheet amounts determined on assumption company has no liabilities 437 Interpretation of the sales of lessors Chapters 437A Determining the ascribed value of plant or machinery 437B Section 437A: supplementary 437C Present value of a lease 438 Overview of Part 439 “Close company” 440 Basis of winding up under section 439(3) 441 Treatment of some persons as participators or directors for the purposes of section 439(3) 442 Particular types of company 443 Companies controlled by or on behalf of Crown 444 Companies involved with non-close companies 445 Section 444: registered pension schemes 446 Particular types of quoted company 447 Section 446: meaning of “shares beneficially held by the public” etc 448 “Associate” 449 “Associated company” 450 “Control” 451 Section 450: rights to be attributed etc 452 “Director” 453 “Loan creditor” 454 “Participator” 455 Charge to tax in case of loan to participator 456 Exceptions to the charge under section 455 457 Section 456: meaning of “material interest in a company” 458 Relief in case of repayment or release of loan 459 Loan treated as made to participator 460 Loan treated as made by close company 461 Exception to section 460 462 Determination of particular questions as a result of section 460 463 Taxation of debtor on release of loan to trustees of settlement which has ended 464 Section 463: other person treated as releasing or writing off debt 464ZA Treatment of certain repayments 464ZB Section 464ZA: supplementary 464A Charge to tax: arrangements conferring benefit on participator 464B Relief in case of return payment to company 465 Power to obtain information 466 Overview of Part 467 Meaning of “charitable company” 468 Meaning of “eligible body” 469 Conditions for qualifying as a scientific research association 470 Meaning of “research and development” in section 469 471 Gifts qualifying for gift aid relief: income tax treated as paid 472 Gifts qualifying for gift aid relief: corporation tax liability and exemption 472A Gifts under payroll deduction schemes: corporation tax liability and exemption 473 Gifts of money from companies: corporation tax liability and exemption 474 Payments from other charities: corporation tax liability and exemption 474A Legacies: corporation tax liability and exemption 475 Gifts qualifying for gift aid relief: income tax treated as paid and exemption 476 Gifts of money from companies: exemption 477 Gifts of money from companies: exemption 477A Claims in relation to gift aid relief 478 Exemption for profits etc of charitable trades 479 Meaning of “charitable trade” 480 Exemption for profits of small-scale trades 481 Exemption from charges under provisions to which section 1173 applies 482 Condition as to trading and miscellaneous incoming resources 483 Exemption for profits from fund-raising events 484 Exemption for profits from lotteries 485 Exemption for property income etc 486 Exemption for investment income and non-trading profits from loan relationships 487 Exemption for public revenue dividends 488 Exemption for certain miscellaneous income 489 Exemption for income from estates in administration 490 Eligible bodies 491 Scientific research associations 491A Claims in relation to certain reliefs 492 Restrictions on exemptions 493 The non-exempt amount 494 Attributing income to the non-exempt amount 495 How income is attributed to the non-exempt amount 496 Meaning of “non-charitable expenditure” 497 Section 496: supplementary 498 Section 496(1)(d): meaning of expenditure 499 Section 496(1)(d): accounting period in which certain expenditure treated as incurred 500 Section 496(1)(d): payment to body outside the UK 501 Section 496(1)(g) and (h): investments and loans 502 Transactions with substantial donors 503 Meaning of “relievable gift” 504 Non-charitable expenditure in substantial donor transactions 505 Adjustment if section 504(1) and (2) applied to single transaction 506 Section 504: certain payments and benefits to be ignored 507 Transactions: exceptions 508 Donors: exceptions 509 Connected charities 510 Substantial donor transactions: supplementary 511 Approved charitable investments 512 Securities which are approved charitable investments 513 Conditions to be met for some securities 514 Approved charitable loans 515 Excess expenditure treated as non-charitable expenditure of earlier periods 516 Rules for attributing excess expenditure to earlier periods 517 Adjustments in consequence of section 515 518 Introduction to Part 519 “Property rental business” 520 “UK property rental business” of non-UK companies 521 “UK company” and “non-UK company” 522 “Residual business” 523 Notice for a group of companies to become a UK REIT 524 Notice for a company to become a UK REIT 525 Notice under section 523 or 524: supplementary 526 Duration of status as UK REIT 527 Being a UK REIT in relation to an accounting period 528 Conditions for company 528ZA Listing requirement: ownership by institutional investors 528ZB Genuine diversity of ownership condition 528A Further condition relating to shares 528B Relaxation of section 528A condition for accounting periods 1 to 3 529 Conditions as to property rental business 530 Condition as to distribution of profits 530A Condition as to distribution of profits: increase in profits after delivery of tax return 531 Conditions as to balance of business 532 Financial statements for group UK REITs 533 Financial statements: supplementary 534 Profits 535 Gains 535A Gains: disposals of rights or interests in UK property rich companies 535B Section 535A: use of pre-April 2019 residual business losses or deficits 536 Effects of entry: corporation tax 537 Effects of entry: CAA 2001 538 Entry charge 539 Calculation of the notional amount 540 Election to treat notional income as arising in instalments 541 Ring-fencing of property rental business 542 Disapplication of certain provisions 543 Profit: financing-cost ratio 544 Meaning of “property profits” and “property financing costs” 545 Cancellation of tax advantage 546 Appeal against notice under section 545 547 Funds awaiting reinvestment 548 Distributions: liability to tax 549 Distributions: supplementary 549A Distributions from one UK REIT to another UK REIT 550 Attribution of distributions 551 Tax consequences of distribution to holder of excessive rights 552 “The section 552 amount” 553 Meaning of “holder of excessive rights” and “excluded holder” 554 Regulations: distributions to holders of excessive rights 554A Meaning of “distribution” 555 Assets: change of use 556 Disposal of assets 557 Movement of assets into ring fence 558 Demergers: disposal of asset 559 Demergers: company leaving group UK REIT 560 Interpretation of Chapter 561 Notice of breach of relevant Chapter 2 condition 562 Breach of condition C in section 528 (conditions for company) 562A Breach of condition D in section 528 (conditions for company) 562B Breach of further condition relating to shares 562C Breach of further condition relating to shares in accounting periods 1, 2 and 3 563 Breach of property rental business condition 564 Breach of condition as to distribution of profits 565 “The section 565 amount” 566 Breach of condition B in section 531 in accounting period 1 567 Meaning of “the notional amount” 568 Breach of balance of business conditions after accounting period 1 569 Chapter subject to section 572 570 Overview of Chapter 571 Termination by notice: group or company 572 Termination by notice: officer of Revenue and Customs 573 Notice under section 572: tax advantage 573A Notice under section 572: condition D in section 528 not met 573B Notice under section 572: further condition relating to shares not met 574 Notice under section 572: serious breach 575 Notice under section 572: breach of conditions as to property rental business 576 Notice under section 572: breach of conditions as to balance of business 577 Notice under section 572: multiple breaches of conditions in Chapter 2 578 Automatic termination for breach of certain conditions in section 528 579 Effects of cessation: corporation tax 580 Effects of cessation: CAA 2001 581 Early exit by notice 582 Early exit 583 Overview of Chapter 584 Meaning of “joint venture company” and “joint venture group” 585 Meaning of “venturing group” and “venturing company” 586 Notice for Part to apply: joint venture company 587 Notice for Part to apply: joint venture group 588 Effect of notice under section 586 589 Effect of notice under section 587 590 Duration of notice under section 586 or 587 591 Conditions as to balance of business 592 Joint venture groups: financial statements 593 Financial statements under section 532: joint venture groups 594 Modifications of Chapter 3 595 Joint venture company liable for additional charge 596 Member of joint venture group liable for additional charge 597 Cases where no additional charge due 598 Chapter 10: supplementary 599 Calculation of profits 599A Amount of distribution consisting of share capital issued in lieu of cash dividend 600 Power to make regulations about cases involving related persons 601 Availability of group reliefs 602 Effect of deemed disposal and reacquisition 603 Regulations 604 Property rental business: exclusion of listed business 605 Property rental business: exclusion of business producing listed income 606 Groups 607 Meaning of “entry” and “cessation” etc 608 References to assets 609 Definitions 610 Discretionary payments by trustees to companies 611 Income tax provisions to apply in relation to trustees' expenses 612 Overview of Chapter 613 Meaning of “open-ended investment company” 614 Applicable corporation tax rate 615 Umbrella companies 616 Meaning of “authorised unit trust” and “unit holder” 617 Authorised unit trust treated as UK resident company 618 Applicable corporation tax rate 619 Umbrella schemes 620 Court investment funds 622A Power to make provision about treatment of transactions 623 Meaning of “securitisation company” 624 Power to make regulations about the taxation of securitisation companies 625 Regulations: supplementary 626 Meaning of “final year”, “penultimate year” etc 627 Meaning of “main rate of corporation tax” for companies with ring fence profits or small profits 628 Company in liquidation: corporation tax rates 629 Company in liquidation: making of assessment to tax 630 Company in administration: corporation tax rates 631 Company in administration: making of assessment to tax 632 Meaning of rate being “fixed” or “proposed” 633 Exemption for interest on overpaid tax in final accounting period 634 Overview of Chapter 635 Application of Chapter 636 Charge to corporation tax on winding up receipts 637 Transfer of rights to payment 638 Allowable deductions 639 Election to carry back 640 Relationship of Chapter with other corporation tax provisions 641 Interpretation of Chapter 642 Disregard of rent from members and of interest payable 643 Exemption for gains on a sale of property 644 Approval of housing associations 645 Tests to be satisfied by the association 646 Delegation of powers to the Regulator of Social Housing 647 Claims under section 642 or 643 648 Adjustments of liability 649 Power to make further provision 650 Meaning of “self-build society” 651 Disregard of rent from members 652 Exemption for gains on disposals of land to members 653 Approval of self-build societies 654 Delegation of powers to the Regulator of Social Housing 655 Claims under section 651 or 652 656 Adjustments of liability 657 Power to make further provision 658 Meaning of “community amateur sports club” and “registered club” 659 Meaning of “open to the whole community” 660 Meaning of “organised on an amateur basis” 660A Clubs consisting mainly of social members 661 Meaning of “eligible sport”, “qualifying purposes” etc 661A The location condition 661B The management condition 661C Periods over which management condition treated as met 661CA The income condition 661D Tax treatment of gifts qualifying for gift aid relief 661E Tax treatment of gifts of money from companies 662 Exemption for UK trading income 663 Exemption for UK property income 664 Exemption for interest , gift aid and company gift income 665 Exemption for chargeable gains 665A Claims in relation to interest , gift aid and company gift income 666 Exemptions reduced if non-qualifying expenditure incurred 667 Rules for attributing surplus amount to earlier periods etc 668 How income and gains are attributed 669 Asset ceasing to be held for qualifying purposes etc 670 Notification of HMRC decision 671 Appeals 672 Overview of Part 673 Introduction to Chapter 674 Disallowance of trading losses 674A Section 674: exception for certain losses of ring fence trade 675 Disallowance of trading losses: calculation of balancing charges 676 Company reconstructions 676AA Introduction to Chapter 676AB Priority of provisions of Chapters 2 and 3 over this Chapter 676AC “Major change in the business” of a company 676AD Notional split of accounting period in which change in ownership occurs 676AE “Affected profits” 676AF Restriction on use of carried-forward post-1 April 2017 trade losses 676AG Restriction on debits to be brought into account 676AH Restriction on the carry forward of post-1 April 2017 non-trading deficit from loan relationships 676AI Restriction on relief for post-1 April 2017 non-trading loss on intangible fixed assets 676AJ Restriction on deduction of post-1 April 2017 expenses of management 676AK Restriction on use of post-1 April 2017 UK property business losses 676AL “Co-transferred company” and “related company” 676BA Introduction to Chapter 676BB Notional split of accounting period in which change in ownership occurs 676BC Disallowance of relief for trade losses 676BD Meaning of “the relevant provisions” 676BE Meaning of “amount of profits which represents a relevant gain” 676CA Introduction to Chapter 676CB Restriction on surrender of carried-forward losses 676CC Cases where consortium condition 1 or 2 was previously met 676CD Cases where consortium condition 3 or 4 was previously met 676CE Exceptions to restrictions 676CF Cases where Chapter 2, 2A or 3 also applies 676CG “Affected profits” 676CH “Relevant pre-acquisition loss” 676CI Interpretation of Chapter 676DA Introduction to Chapter 676DB Notional split of accounting period in which change in ownership occurs 676DC Disallowance of group relief for carried-forward losses 676DD Meaning of “the relevant provisions” 676DE Meaning of “amount of profits which represents a relevant gain” 676EA Introduction to Chapter 676EB Restriction on use of trade losses carried-forward on transfer of trade 676EC Restriction on surrender of trade losses carried forward on transfer of trade 676ED Indirect transfers of a trade 676EE Interpretation of Chapter 677 Introduction to Chapter 678 Notional split of accounting period in which change in ownership occurs 679 Restriction on debits to be brought into account 680 Restriction on the carry forward of non-trading deficit from loan relationships 681 Restriction on relief for non-trading loss on intangible fixed assets 682 Restriction on the deduction of expenses of management 683 Disallowance of UK property business losses 684 Disallowance of overseas property business losses 685 Apportionment of amounts 686 Meaning of certain expressions in section 685 687 Adjustment to balancing charges if relief is restricted 688 Meaning of “significant increase in the amount of a company's capital” 689 Amount A 690 Amount B 691 Meaning of “amount of capital” 692 Introduction to Chapter 693 Meaning of “amount of profits which represents a relevant gain” 694 Meaning of “the relevant provisions” 695 Notional split of accounting period in which change in ownership occurs 696 Restriction on debits to be brought into account 697 Restriction on the carry forward of non-trading deficit from loan relationships 698 Restriction on relief for non-trading loss on intangible fixed assets 699 Restrictions on the deduction of expenses of management 700 Disallowance of UK property business losses 701 Disallowance of overseas property business losses 702 Apportionment of amounts 703 Meaning of certain expressions in section 702 704 Company carrying on UK property business 705 Company carrying on overseas property business 705A Introduction to Chapter 705B Notional split of accounting period in which change in ownership occurs 705C Restriction on debits to be brought into account 705D Restriction on carry forward of non-trading deficit from loan relationships 705E Restriction on relief for non-trading loss on intangible fixed assets 705F Apportionment of amounts 705G Meaning of certain expressions in section 705F 706 Meaning of “linked” person 707 Meaning of “control” 708 Rights to be attributed for the purposes of section 707 709 Meaning of “the relevant period” 710 Recovery of unpaid corporation tax for accounting period beginning before change 711 Conditions relating to company's trade or business 712 Meaning of “a major change in the nature or conduct of a trade or business” 713 Recovery of unpaid corporation tax for accounting period ending on or after change 714 The expectation condition 715 Meaning of “transaction entered into in connection with change in ownership” 716 Interest 717 Effect of payment in pursuance of assessment under section 710 or 713 718 Meaning of “associated company” 719 Meaning of “change in the ownership of a company” 720 Section 719: supplementary 721 When things other than ordinary share capital may be taken into account: Chapters 2 to 5A 722 When things other than ordinary share capital may be taken into account: Chapter 6 723 Changes in indirect ownership 724 Disregard of change in company ownership 724A Disregard of change in parent company 725 Provision applying for the purposes of Chapters 2 to 5A 726 Interpretation of Chapter 727 Extended time limit for assessment 728 Provision of information about ownership of shares etc 729 Meaning of “company with investment business” 730 Meaning of “relevant non-trading debit” 730A Overview 730B Interpretation of Part 730C Disallowance of deductible amounts: relevant claims 730D Disallowance of deductible amounts: profit transfers 730E Overview 730F Meaning of “relevant carried-forward loss” 730G Disallowance of deductions for relevant carried-forward losses 730H Interpretation of section 730G 731 Overview of Part 732 Meaning of “corporation tax advantage” 733 Company liable to counteraction of corporation tax advantage 734 Exception where no tax avoidance object shown 735 Abnormal dividends used for exemptions or reliefs (circumstance A) 736 Receipt of consideration representing company's assets, future receipts or trading stock (circumstance C) 737 Receipt of consideration in connection with relevant company distribution (circumstance D) 738 Receipt of assets of relevant company (circumstance E) 739 Meaning of “relevant company” in sections 737 and 738 740 Abnormal dividends: general 741 Abnormal dividends: the excessive return condition 742 Abnormal dividends: the excessive accrual condition 743 Preliminary notification that section 733 may apply 744 Opposed notifications: statutory declarations 745 Opposed notifications: determinations by tribunal 746 Counteraction notices 747 Timing of assessments in section 738 cases 748 Application for clearance of transactions 749 Effect of clearance notification under section 748 750 Appeals against counteraction notices 751 Interpretation of Part 752 Application of Chapter 753 Value of transferred income stream treated as income 754 Exception: amount otherwise taxed 755 Exception: transfer by way of security 756 Partnership shares 757 Interpretation of Chapter 757A Application of Chapter 757B Relevant amount to be treated as income 758 Type 1 finance arrangement defined 759 Certain tax consequences not to have effect 760 Payments treated as borrower's income 761 Deemed loan relationship if borrower is a company 762 Deemed loan relationship if borrower is partnership with corporate member 763 Type 2 finance arrangement defined 764 Relevant change in relation to partnership 765 Certain tax consequences not to have effect 766 Deemed loan relationship 767 Type 3 finance arrangement defined 768 Certain tax consequences not to have effect 769 Deemed loan relationship 770 Exceptions: preliminary 771 Exceptions 772 Exceptions: relevant person 773 Power to make further exceptions 774 Accounts 775 Arrangements 776 Assets 777 Loan or credit transaction defined 778 Certain payments treated as interest 779 Tax charged on income transferred 779A Application of Chapter 779B Relevant amount to be treated as income 814A Overview of Part 814B Key definitions 814C Treatment of payer of manufactured dividend 814D Treatment of recipient of manufactured dividend 834 Overview of Chapter 835 Transferor or associate becomes liable for payment of rent 836 Transferor or associate becomes liable for payment other than rent 837 Relevant corporation tax relief 838 Relevant corporation tax relief: deduction not to exceed commercial rent 839 Deduction ... not to exceed commercial rent 840 Carrying forward parts of payments 841 Aggregation and apportionment of payments 842 Payments made for later periods 843 Exclusion of service charges etc 844 Commercial rent: comparison with rent under a lease 845 Commercial rent: comparison with payments other than rent 846 Lease and rent 847 Associated persons 848 Land outside the UK 849 Overview of Chapter 850 New lease after assignment or surrender 851 Taxation of consideration 852 Position where new lease does not include all original property 853 Relief for rent under new lease 854 New lease treated as ending 855 Position where rent reduces 856 Position where lease may be ended 857 Position where lease may be varied 858 Lease treated as ending: rentcharge 859 Lease varied to provide for increased rent 860 Relevant corporation tax relief 861 Linked persons 862 Lease, lessee, lessor and rent 863 Overview of Chapter 864 Leased trading assets 865 Tax deduction not to exceed commercial rent 866 Long funding finance leases 867 Commercial rent 868 Lease 869 Relevant asset 870 Overview of Chapter 871 Application of the Chapter 872 Payment under lease 873 Sum obtained 874 Charge to corporation tax 875 Hire-purchase agreements 876 Adjustments where sum obtained before payment made 877 Sum obtained in respect of interest 878 Sum obtained in respect of lessee's interest 879 Disposal of interest to associate 880 Apportionment of payments made and of sums obtained 881 Manner of apportionment 882 Associates 883 Capital sum 884 Lease 885 Relevant asset 886 Relevant tax relief 887 When restrictions on leasing partnership losses under this Chapter apply 888 Restrictions on leasing partnership losses 889 Interpretation of Chapter 890 Capital payments in respect of leases treated as income 891 Apportionments for leases of plant or machinery and other property 892 Deduction where failure to make relevant capital payment expected 893 Meaning of “capital payment”, “relevant capital payment” etc 894 Other interpretation of Chapter 894A Consideration for taking over payment obligations as lessee treated as income 895 Overview of Part 896 Normal rent 897 Accountancy rental earnings 898 Rental earnings 899 Arrangements to which this Chapter applies 900 Purposes of this Chapter 901 Application of this Chapter 902 The conditions referred to in section 901(1) 903 Provisions supplementing section 902 904 The arrangements and circumstances referred to in section 902(8) 905 Current lessor taxed by reference to accountancy rental earnings 906 Reduction of taxable rent by cumulative rental excesses: introduction 907 Meaning of “accountancy rental excess” and “cumulative accountancy rental excess” 908 Reduction of taxable rent by the cumulative accountancy rental excess 909 Meaning of “normal rental excess” and “cumulative normal rental excess” 910 Reduction of taxable rent by the cumulative normal rental excess 911 Relief for bad debts: reduction of cumulative accountancy rental excess 912 Recovery of bad debts following reduction under section 911 913 Relief for bad debts: reduction of cumulative normal rental excess 914 Recovery of bad debts following reduction under section 913 915 Effect of disposals of leases: general 916 Assignments on which neither a gain nor a loss accrues 917 Effect of capital allowances: introduction 918 Cases where expenditure taken into account under Part 2, 5 or 8 of CAA 2001 919 Cases where expenditure taken into account under other provisions of CAA 2001 920 Capital allowances deductions: waste disposal and cemeteries 921 Capital allowances deductions: films 922 Contributors to capital expenditure 923 Pre-26 November 1996 schemes where this Chapter does not at first apply 924 Post-25 November 1996 schemes to which Chapter 3 applied first 925 Introduction to Chapter 926 Purpose of this Chapter 927 Leases to which this Chapter applies 928 Current lessor taxed by reference to accountancy rental earnings 929 Application of provisions of Chapter 2 for purposes of this Chapter 930 Pre-26 November 1996 schemes and post-25 November 1996 schemes 931 Time apportionment where periods of account do not coincide 932 Periods of account and related periods of account and accounting periods 933 Connected persons 934 Assets which represent the leased asset 935 Parent undertakings and consolidated group accounts 936 Assessments and adjustments 937 Interpretation of Part 937A Overview 937B Group schemes and single company schemes 937C Meaning of “risk transfer scheme” 937D Meaning of “the scheme rate, index or value” 937E Scheme losses and scheme profits 937F Ring-fenced scheme losses and relevant scheme profits 937G Ring-fenced scheme loss: treatment in period in which made 937H Ring-fenced scheme loss: treatment in subsequent periods 937I A company's losses pool and profits pool 937J Tax capacity assumption 937K Meaning of “associated with” 937L Interpretation of references to economic losses and profits 937M Foreign currency accounting 937N Meaning of “scheme” 937NA Priority 937O Power to amend this Part in its application to dealers in securities 938A Losses and profits from group mismatch schemes to be disregarded 938B Meaning of “a group mismatch scheme” and “the scheme group” 938C Meaning of “scheme loss” and “scheme profit” 938D Meaning of “relevant tax advantage” etc and “the scheme period” 938E Meaning of “group” 938F Meaning of references to economic profits and losses 938G Tax capacity assumption 938H Meaning of “scheme” 938I Schemes involving repos or quasi-repos 938J Schemes involving finance arrangements 938K Trading income 938L Foreign companies and foreign permanent establishments 938M Controlled foreign companies 938N Priority 938O Losses and profits from tax mismatch scheme to be disregarded 938P Meaning of “tax mismatch scheme” 938Q Meaning of “scheme loss” and “scheme profit” 938R Meaning of “relevant tax advantage” etc and “the scheme period” 938S Meaning of references to economic profits and losses 938T Tax capacity assumption 938U Meaning of “scheme” 938V Priority 939A Overview of Part 939B Relievable charity donations 939C Tainted donations 939D Circumstances in which financial advantage deemed to be obtained 939E Certain financial assistance to be ignored 939F Removal of corporation tax relief where donation becomes tainted in same accounting period 939FA Clawback of corporation tax relief where donation becomes tainted in later accounting period 939FB Removal or clawback of corporation tax relief for associated donations 939G Connected charities 939H Connected persons 939I Minor definitions 940A Overview of Chapter 940B Meaning of “transfer of a trade” and related expressions 940C Transfers to which Chapter applies 941 The ownership condition 942 Options that may be applied for the purposes of the ownership condition 943 The tax condition 943A Disapplication of section 39 944 Modified application of section 45 944A Modified application of section 45A 944B Modified application of section 45B 944C Modified application of section 45F 944D Modified application of section 303B 944E Modified application of section 303D 945 Cases in which predecessor retains more liabilities than assets 946 Rules for determining “L” 947 Rules for determining “A” 948 Modified application of CAA 2001 949 Dual resident investing companies 950 Transfers of trades involving business of leasing plant or machinery 951 Part of trade treated as separate trade 952 Apportionment if part of trade treated as separate trade 953 Application of Chapter to further transfers of a trade 954 Transfer of activities on complete cessation of trade 955 Transfer of activities on part cessation of trade 956 Apportionment if part of trade treated as separate trade 957 Chapter 2: supplementary 958 Application 959 Arrangements for transfer of relief 960 Restrictions on use of reliefs 961 Non-trading profits and losses 962 Interpretation of Chapter 963 Power to surrender tax refund 964 Effects of surrender of tax refund 965 Interest on tax overpaid or underpaid 966 Payments for surrendered tax refunds 967 Deductions from payments received by UK resident companies 968 Deductions from payments received by non-UK resident companies 969 Introduction to Chapter 970 Obligations and liabilities in relation to corporation tax 971 Exceptions 972 Interpretation of Chapter 973 Introduction to Chapter 974 Case in which this Chapter applies 975 Meaning of “the relevant period” 976 Meaning of “related company” 977 Notice requiring payment of unpaid tax 978 Time limit for giving notice 979 Amount payable in consortium case 980 Chapter 7: supplementary 981 Exemption for trade unions and eligible employers' associations 982 Qualifying income or gains 983 Meaning of “trade union” and “eligible employers' association” 984 Local authorities and local authority associations 985 Health service bodies 986 Meaning of “health service body” 987 NHS foundation trusts 987A Chief constables etc (England and Wales) 987B Education Authority of Northern Ireland 987C Northern Ireland Housing Executive 988 Issue departments of the Reserve Bank of India and the State Bank of Pakistan 989 Agricultural societies 990 UK Economic Interest Groupings and European Economic Interest Groupings 991 Harbour reorganisation schemes: corporation tax 992 Harbour reorganisation schemes: capital allowances etc 993 Harbour reorganisation schemes: chargeable gains 994 Transfer of part of trade 995 Interpretation of sections 991 to 994 996 Use of different accounting practices within a group of companies 996A Deductions from total profits for sporting testimonial payments and associated payments 997 Overview of Part 998 Overview of Chapter 999 Priority of negative rules 1000 Meaning of “distribution” 1001 Provisions related to paragraphs A to H in section 1000(1) 1002 Exceptions for certain transfers of assets or liabilities between a company and its members 1003 Redeemable share capital 1004 Securities issued otherwise than for new consideration 1005 Meaning of “non-commercial securities” 1006 Distributions exceeding consideration received for issue of security 1007 Securities issued at premium representing new consideration 1008 Consideration for issue of security exceeding amount of principal 1009 Securities reflecting dividends on certain shares etc: exclusion of section 1008 1010 Meaning of “qualifying index” in section 1009 1011 Meaning of “associated company” in section 1009 1012 Hedging arrangements 1013 Exception to section 1012 1014 Meaning of “hedging arrangements” 1015 Meaning of “special securities” 1016 Meaning of “equity note” in section 1015 1017 Section 1015: other interpretation 1018 The principal secured: special securities 1019 Relevant alternative finance return 1020 Transfers of assets or liabilities treated as distributions 1021 Section 1020: exceptions 1022 Bonus issue following repayment of share capital treated as distribution 1023 Exceptions to section 1022(3) 1024 Premiums paid on redemption of share capital 1025 Share capital issued at a premium representing new consideration 1026 Distributions following a bonus issue 1027 Cap on amount of distributions affected by section 1026 1027A Distributions following reduction of share capital 1028 Certain payments connected with exempt distributions 1029 Overview of Chapter 1030 Distribution in respect of share capital in a winding up 1030A Distributions in respect of share capital prior to dissolution of company 1030B Section 1030A: effect of company not being dissolved, etc 1031 Distribution as part of a cross-border merger 1032 Interest etc paid in respect of certain securities 1032A Payment in respect of tier two capital 1033 Purchase by unquoted trading company of own shares 1034 Requirements as to residence 1035 Requirement as to period of ownership 1036 Determining the period of ownership 1037 Requirement as to reduction of seller's interest as shareholder 1038 Section 1037: effect of entitlement to profits 1039 Requirements where purchasing company is a member of a group 1040 Determining whether interests as shareholders in a group are substantially reduced 1041 Section 1040: effect of entitlement to profits 1042 Other requirements 1043 Relaxation of requirements in certain cases 1044 Advance clearance of payments by Commissioners 1045 Advance clearance: supplementary 1046 Information and returns 1047 Meaning of “group” and “51% subsidiary” in sections 1033 to 1047 1048 Sections 1033 to 1047: other interpretation 1049 Stock dividends 1050 Application of section 1049 where bonus share capital is converted etc 1051 “Bonus share capital” and “in lieu of a cash dividend” 1052 Share capital to which section 1049 applies: returns 1053 Return periods 1054 Building society payments 1055 Registered societies : interest and share dividends 1056 Dividend or bonus relating to transactions 1057 UK agricultural or fishing co-operatives: interest and share dividends 1058 Meaning of “UK agricultural or fishing co-operative” 1059 Associated persons 1060 Associated persons: trustees 1061 Associated persons: personal representatives 1062 Connected persons 1063 Section 1062: supplementary 1064 Certain expenses of close companies treated as distributions 1065 Exception for benefits treated as employment income etc 1066 Exception for certain transfers between UK resident companies 1067 Companies acting in concert or under arrangements 1068 Meaning of “participator” in sections 1064 to 1067 1069 Additional persons treated as participators 1070 Companies carrying on a mutual business 1071 Companies not carrying on a business 1072 Members of a 90% group 1073 Key terms etc 1074 Purpose of provisions about demergers 1075 Exempt distributions 1076 Transfer of shares in subsidiaries to members 1077 Transfer by distributing company and issue of shares by transferee company 1078 Division of business in a cross-border transfer 1079 “The distributing company” 1080 Meaning of “relevant company” 1081 General conditions 1082 Conditions for distributions within section 1076(a) 1083 Conditions for distributions within section 1077(1) 1084 Cases where condition K does not apply 1085 Conditions to be met if the distributing company is a 75% subsidiary 1086 Chargeable payments connected with exempt distributions 1087 Chargeable payments not deductible in calculating profits 1088 Meaning of “chargeable payment” 1089 Meaning of “chargeable payment”: unquoted companies 1090 Meaning of “company concerned in an exempt distribution” 1091 Advance clearance of distributions 1092 Advance clearance of payments 1093 Requirements relating to applications for clearance 1094 Decision of the Commissioners or tribunal 1095 Exempt distributions: returns 1096 Chargeable payments etc: returns 1097 Information about person for whom a payment is received 1098 Meaning of “unquoted company” 1099 Other definitions etc 1100 Certain distributions: right to request a statement 1101 Other distributions etc: returns and information 1102 Other distributions etc: additional information 1103 Power to modify or replace sections 1101 and 1102 1104 Company distributing dividend or interest: duty to provide tax certificates 1105 Duties of nominees 1106 Meaning of “tax certificate” etc 1107 Penalties 1108 Alternative means of compliance with sections 1104 and 1105 1109 Tax credits for certain recipients of exempt qualifying distributions 1110 Recovery of overpaid tax credit etc 1111 Section 1110: supplementary 1112 Arrangements between companies 1113 “In respect of shares” 1114 “In respect of securities” 1115 “New consideration” 1116 References to married persons, or civil partners, living together 1117 Other interpretation 1118 Introduction to Chapter 1119 The definitions 1120 “Bank” 1121 “Company” 1122 “Connected” persons 1123 “Connected” persons: supplementary 1124 “Control” 1125 “Farming” and related expressions 1126 “Franked investment income” 1127 “Generally accepted accounting practice” and related expressions 1128 “Grossing up” 1129 “Hire-purchase agreement” 1130 “Local authority” 1131 “Local authority association” 1132 “Offshore installation” 1133 Regulations about the meaning of “offshore installation” 1134 “Oil and gas exploration and appraisal” 1135 “Property investment LLP” 1136 “Qualifying distribution” 1137 “Recognised stock exchange” 1138 “Research and development” 1139 “Tax advantage” 1140 “Unauthorised unit trust” 1140A Introduction 1141 Permanent establishments of companies 1142 Agent of independent status 1143 Preparatory or auxiliary activities 1144 Alternative finance arrangements 1145 The independent broker conditions 1146 The independent investment manager conditions 1147 Investment managers: the 20% rule 1148 Section 1147: interpretation 1149 Application of 20% rule to collective investment schemes 1150 Meaning of “investment manager” and “investment transaction” 1151 Lloyd's agents 1152 Investment managers: disregard of certain chargeable profits 1153 Miscellaneous 1154 Meaning of “51% subsidiary”, “75% subsidiary” and “90% subsidiary” 1155 Indirect ownership of ordinary share capital 1156 Calculation of amounts owned indirectly: main rules 1157 Adding fractions together 1158 Meaning of “investment trust” 1159 Approval 1160 Calculation of income 1161 The income retention condition: exceptions 1162 The 15% holding limit: exceptions 1163 Basic meaning of “holding in a company” 1164 More about the meaning of “holding in a company” 1165 Other interpretation 1166 Scotland 1167 Sources of income within the charge to corporation tax or income tax 1168 Payment of dividends 1169 Settlements and trustees 1170 Territorial sea of the United Kingdom 1171 Orders and regulations 1172 Apportionment to different periods 1173 Miscellaneous charges 1174 Abbreviated references to Acts 1175 Claims and elections 1176 Meaning of “connected” persons and “control” 1177 Minor and consequential amendments 1178 Power to make consequential provision 1179 Power to undo changes 1180 Transitional provisions and savings 1181 Repeals and revocations 1182 Index of defined expressions 1183 Extent 1184 Commencement 1185 Short title SCHEDULE 1 Minor and consequential amendments SCHEDULE 2 Transitionals and savings etc SCHEDULE 3 Repeals and revocations SCHEDULE 4 Index of defined expressions
What to do with it
As published
357BHA Notional royalty
(1) This section applies where—
(a) a company holds a qualifying IP right or an exclusive licence in respect of a qualifying IP right,
(b) the qualifying IP right falls within paragraph (a), (b) or (c) of section 357BB(1), and
(c) the income of a trade of the company for an accounting period includes income (“IP-derived income”) which—
(i) arises from things done by the company that involve the exploitation by the company of the qualifying IP right, and
(ii) is not relevant IP income, finance income or excluded income.
(2) The company may elect that the appropriate percentage of the IP-derived income is to be treated for the purposes of this Part as if it were relevant IP income.
(3) The “appropriate percentage” is the proportion of the IP-derived income which the company would pay another person (“P”) for the right to exploit the qualifying IP right in the accounting period concerned if the company were not otherwise able to exploit it.
(4) For the purposes of determining the appropriate percentage under this section, assume that—
(a) the company and P are dealing at arm's length,
(b) the company, or the company and persons authorised by it, will have the right to exploit the qualifying IP right to the exclusion of any other person (including P),
(c) the company will have the same rights in relation to the qualifying IP right as it actually has,
(d) the right to exploit the qualifying IP right is conferred on the relevant day,
(e) the appropriate percentage is determined at the beginning of the accounting period concerned,
(f) the appropriate percentage will apply for each succeeding accounting period for which the company will have the right to exploit the qualifying IP right, and
(g) no income other than IP-derived income will arise from anything done by the company that involves the exploitation by the company of the qualifying IP right.
(5) In subsection (4)(d) “the relevant day” means—
(a) the first day of the accounting period concerned, or
(b) if later, the day on which the company first began to hold the qualifying IP right or licence.
(6) In determining the appropriate percentage, the company must act in accordance with—
(a) Article 9 of the OECD Model Tax Convention, and
(b) the OECD transfer pricing guidelines.
(7) In this section “excluded income” means any income falling within either of the Heads in section 357BHB.
Your wording
Your change, as a redline
357BHA Notional royalty
(1) This section applies where—
(a) a company holds a qualifying IP right or an exclusive licence in respect of a qualifying IP right,
(b) the qualifying IP right falls within paragraph (a), (b) or (c) of section 357BB(1), and
(c) the income of a trade of the company for an accounting period includes income (“IP-derived income”) which—
(i) arises from things done by the company that involve the exploitation by the company of the qualifying IP right, and
(ii) is not relevant IP income, finance income or excluded income.
(2) The company may elect that the appropriate percentage of the IP-derived income is to be treated for the purposes of this Part as if it were relevant IP income.
(3) The “appropriate percentage” is the proportion of the IP-derived income which the company would pay another person (“P”) for the right to exploit the qualifying IP right in the accounting period concerned if the company were not otherwise able to exploit it.
(4) For the purposes of determining the appropriate percentage under this section, assume that—
(a) the company and P are dealing at arm's length,
(b) the company, or the company and persons authorised by it, will have the right to exploit the qualifying IP right to the exclusion of any other person (including P),
(c) the company will have the same rights in relation to the qualifying IP right as it actually has,
(d) the right to exploit the qualifying IP right is conferred on the relevant day,
(e) the appropriate percentage is determined at the beginning of the accounting period concerned,
(f) the appropriate percentage will apply for each succeeding accounting period for which the company will have the right to exploit the qualifying IP right, and
(g) no income other than IP-derived income will arise from anything done by the company that involves the exploitation by the company of the qualifying IP right.
(5) In subsection (4)(d) “the relevant day” means—
(a) the first day of the accounting period concerned, or
(b) if later, the day on which the company first began to hold the qualifying IP right or licence.
(6) In determining the appropriate percentage, the company must act in accordance with—
(a) Article 9 of the OECD Model Tax Convention, and
(b) the OECD transfer pricing guidelines.
(7) In this section “excluded income” means any income falling within either of the Heads in section 357BHB.
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.