(1) This section has effect for the purposes of the provisions of the Corporation Tax Acts which apply this section.
(2) “Tax advantage” means—
(a) a relief from tax or increased relief from tax,
(b) a repayment of tax or increased repayment of tax,
(c) the avoidance or reduction of a charge to tax or an assessment to tax, ...
(d) the avoidance of a possible assessment to tax , ...
(da) the avoidance or reduction of a charge or assessment to a charge under Part 9A of TIOPA 2010 (controlled foreign companies), or
(e) the avoidance or reduction of a charge or assessment to the bank levy under Schedule 19 to FA 2011 (the bank levy) ...
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) For the purposes of subsection (2)(c) and (d) it does not matter whether the avoidance or reduction is effected—
(a) by receipts accruing in such a way that the recipient does not pay or bear tax on them, or
(b) by a deduction in calculating profits or gains.
(3A) The avoidance or reduction of a charge or assessment to the bank levy as a result of arrangements to which paragraph 47 of Schedule 19 to FA 2011 (bank levy: anti-avoidance) applies is to be ignored for the purposes of subsection (2)(e) to the extent that it results from arrangements, or part of arrangements, to which any of paragraph 47(7) to (12) of that Schedule applies.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) In the Corporation Tax Acts “unauthorised unit trust” means a unit trust scheme which is neither an authorised unit trust nor an umbrella scheme.
(2) But if a unit trust scheme is not, under regulations made under section 1007(2) of ITA 2007, to be a unit trust scheme for the purposes of the definition of “unauthorised unit trust” in section 989 of that Act, it is not to be a unit trust scheme for the purposes of subsection (1).
(3) In subsection (1) “umbrella scheme” has the same meaning as in section 619.
(1) This Chapter applies for the purpose of determining when a company has a permanent establishment in a territory for the purposes of the Corporation Tax Acts.
(2) So far as provisions in this Chapter are in substantially the same terms as Article 5 of the Model Tax Convention on Income and on Capital approved by the OECD Council on 18 November 2025 they are to be read and given effect, so far as possible, in a way that is consistent with the OECD’s commentary on that Article, also approved by the OECD Council on that date.
(3) Any reference in subsection (2) to a document approved by the OECD Council is to that document as it may be amended or replaced from time to time.
(4) And any such document is to be read in accordance with any reservation, declaration or election made by the United Kingdom in relation to that document.
(5) The Treasury may by regulations make provision—
(a) for subsection (3) not to apply in relation to any specified amendment or replacement of a document referred to in subsection (2),
(b) about the effect of any provision of a document referred to in subsection (2) that has been amended or replaced on or after 26 November 2025 where that provision is elective (however expressed), and
(c) amending subsection (2) to add a reference to a further document published by the OECD.
“Specified” means specified in regulations.
(1) For the purposes of the Corporation Tax Acts a company has a permanent establishment in a territory if (and only if)—
(a) it has a fixed place of business there through which the business of the company is wholly or partly carried on, or
(b) a person acting on behalf of the company in the territory habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts, that are routinely concluded without material modification by the company, and the contracts are—
(i) for the transfer of the ownership of, or for the granting of the right to use, property owned by the company or that the company has the right to use, or
(ii) for the provision of services by the company.
(2) For this purpose a “fixed place of business” includes (without prejudice to the generality of that expression)—
(a) a place of management,
(b) a branch,
(c) an office,
(d) a factory,
(e) a workshop,
(f) an installation or structure for the exploration of natural resources,
(g) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, and
(h) a building site or construction or installation project.
(3) Subsection (1) is subject to sections 1142 to 1144.
(1) A company is not regarded as having a permanent establishment in a territory by reason of the fact that it carries on business there through an agent of independent status acting in the ordinary course of the agent's business.
(1A) A person is not to be regarded for the purposes of subsection (1) as an agent of independent status in relation to a company where the person—
(a) is closely related to the company, and
(b) acts exclusively or almost exclusively on behalf of—
(i) the company, or
(ii) the company and other companies to which the person is closely related.
(1B) In subsection (1A), “closely related” has the meaning that it has in section 1143 (see subsection (2CA) of that section).
(2) Sections 1145 to 1150 modify the application of this section in relation to transactions carried out on behalf of a non-UK resident company by a person in the United Kingdom acting as—
(a) a broker (section 1145), or
(b) an investment manager (sections 1146 to 1150), ...
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) If the condition in subsection (2) is met, a company is not regarded as having a permanent establishment in a territory by reason of the fact that—
(a) a fixed place of business is maintained there for the purpose of carrying on activities for the company, or
(b) an agent carries on activities there for and on behalf of the company.
(2) The condition is that, in relation to the business of the company as a whole, the activities carried on are only of a preparatory or auxiliary character and are not part of a fragmented business operation.
(2A) Activities are “part of a fragmented business operation” if—
(a) they are carried on (whether at the same place or at different places in the same territory) by the company or a person closely related to the company,
(b) they constitute complementary functions that are part of a cohesive business operation, and
(c) subsection (2B) applies.
(2B) This subsection applies if—
(a) the overall activity resulting from the combination of the functions mentioned in subsection (2A)(b) is not activity that is only of a preparatory or auxiliary character, or
(b) the company or a person closely related to the company has a permanent establishment in the territory by reason of carrying on any of those functions.
(2C) A person who is not a company is to be treated for the purposes of subsection (2B)(b) as having a permanent establishment in a territory if, were the person a company, the person would have a permanent establishment in the territory.
(2CA) For the purposes of this section, one person (“A”) is closely related to another person (“B”) if, based on all the relevant facts and circumstances, A has control of B or A and B are under the control of the same persons, including if the 50% investment condition is met in relation to A and B.
(2E) The 50% investment condition is met in relation to A and B if—
(a) A has a 50% investment in B (or vice versa), or
(b) a third person has a 50% investment in each of A and B,
and section 259ND of TIOPA 2010 (meaning of “50% investment”) applies for the purposes of determining whether a person has a “50% investment".
(3) In this section “activities of a preparatory or auxiliary character” include (without prejudice to the generality of that expression)—
(a) the use of facilities for the purpose of storage, display or delivery of goods or merchandise belonging to the company,
(b) the maintenance of a stock of goods or merchandise belonging to the company for the purpose of storage, display or delivery,
(c) the maintenance of a stock of goods or merchandise belonging to the company for the purpose of processing by another person, and
(d) purchasing goods or merchandise, or collecting information, for the company.
(1) Subsection (2) applies if alternative finance return is paid to a non-UK resident company.
(2) The company is not regarded as having a permanent establishment in the United Kingdom merely by virtue of anything done for the purposes of the alternative finance arrangements—
(a) by the other party to the arrangements, or
(b) by any other person acting for the company in relation to the arrangements.
(3) In subsection (1) “alternative finance return” means alternative finance return within the application of—
(a) section 564I, 564K or 564L(2) or (3) of ITA 2007, or
(b) section 511, 512 or 513(2) or (3) of CTA 2009.
(4) In subsection (2) the reference to “the alternative finance arrangements” is a reference to the alternative finance arrangements under which the alternative finance return mentioned in subsection (1) is paid.
(1) This section applies if a transaction is carried out on behalf of a non-UK resident company in the course of the company's trade by a person in the United Kingdom acting as a broker.
(2) In relation to the transaction, the broker is regarded for the purposes of section 1142(1) as an agent of independent status acting in the ordinary course of the broker's business if (and only if) each of conditions A to D is met.
(3) Condition A is that at the time of the transaction the broker is carrying on the business of a broker.
(4) Condition B is that the transaction is carried out in the ordinary course of that business.
(5) Condition C is that the remuneration which the broker receives in respect of the transaction for the provision of the services of a broker to the non-UK resident company is not less than is customary for that class of business.
(6) Condition D is that the broker does not fall (apart from this subsection) to be treated as a permanent establishment of the non-UK resident company in relation to any other transaction of any kind carried out in the same accounting period of the non-UK resident company as the transaction in question.
1146 The independent investment manager conditions
(1) This section applies if an investment transaction is carried out on behalf of a non-UK resident company in the course of the company's trade by a person in the United Kingdom acting as an investment manager.
(2) In relation to the investment transaction, the circumstances in which the investment manager is regarded for the purposes of section 1142(1) as an agent of independent status acting in the ordinary course of the investment manager's business include where each of the following conditions (the independent investment manager conditions) are met.
(3) Condition A is that at the time of the transaction the investment manager is carrying on a business of providing investment management services.
(4) Condition B is that the transaction is carried out in the ordinary course of that business.
(5) Condition C is that, when the investment manager acts on behalf of the non-UK resident company in relation to the transaction, the relationship between them, having regard to its legal, financial and commercial characteristics, is a relationship between persons carrying on independent businesses dealing with each other at arm's length.
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) Condition E is that the remuneration which the investment manager receives in respect of the transaction for the provision of investment management services to the non-UK resident company is not less than is customary for that class of business.
1150 Meaning of “investment manager” and “investment transaction”
(1) The following definitions apply for the purposes of this Chapter.
(2) An “investment manager” means a person who provides investment management services (which may include or comprise the provision of investment advice).
(3) An “investment transaction” means any transaction other than a transaction with an excluded subject matter.
(4) The following are excluded subject matters—
(a) land in the United Kingdom, and
(b) any commodity or other physical asset.
(5) But a transaction is to be treated as not having an excluded subject matter if—
(a) it is a derivative contract whose subject matter is a commodity but which does not result in the physical delivery of the commodity, or
(b) it is a derivative contract whose subject matter is an excluded subject matter only because it operates by reference to a qualifying index, provided that index is not maintained by a person who is connected to any of the parties to the transaction.
(6) For the purposes of subsection (5) a “qualifying index” means an index relating to an excluded subject matter that—
(a) is publicly available, and
(b) is an index of a substantial number of assets.
(1) For the purposes of this Chapter a person is regarded as carrying out a transaction on behalf of another if the person—
(a) undertakes the transaction, whether on behalf of or to the account of the other, or
(b) gives instructions for it to be so carried out by another.
(2) In the case of a person who acts as a broker or investment manager as part only of a business, this Chapter has effect as if that part were a separate business.
1154 Meaning of “51% subsidiary”, “75% subsidiary” and “90% subsidiary”
(1) Subsections (2) to (4) define, for the purposes of the Corporation Tax Acts, the circumstances in which a body corporate (“B”) is a 51% subsidiary, a 75% subsidiary or a 90% subsidiary of another body corporate (“A”).
(2) B is a 51% subsidiary of A if more than 50% of B's ordinary share capital is owned directly or indirectly by A.
(3) B is a 75% subsidiary of A if at least 75% of B's ordinary share capital is owned directly or indirectly by A.
(4) B is a 90% subsidiary of A if at least 90% of B's ordinary share capital is owned directly by A.
(5) For the purposes of subsections (2) and (3) ordinary share capital is owned “directly or indirectly” by a body corporate if it is owned by it—
(a) directly,
(b) indirectly, or
(c) partly directly and partly indirectly.
(6) In this Chapter references to ownership are to be read as references to beneficial ownership.
(1) For the purposes of this Chapter ordinary share capital is owned indirectly by a body corporate if it is owned through another body corporate or other bodies corporate.
(2) References in this Chapter to ownership through a body corporate are to be read in accordance with subsections (3) and (4).
(3) Suppose that 3 or more bodies corporate are ordered in a series such that each body in the series (other than the last) owns ordinary share capital of the body immediately below it in the series.
(4) If B is a body that is below, but not immediately below, A in the series, A is said to own ordinary share capital of B through each body corporate that is between A and B in the series.
(5) Sections 1156 and 1157 contain rules for calculating, for the purposes of this Chapter, the amount of a body corporate's ordinary share capital that another body corporate owns—
(a) indirectly, or
(b) partly directly and partly indirectly.
1156 Calculation of amounts owned indirectly: main rules
(1) If a body corporate (“A”) directly owns the whole of the ordinary share capital of another body corporate (“B”), A is treated as indirectly owning the whole of any ordinary share capital that is owned directly or indirectly by B.
(2) If a body corporate (“A”) directly owns a fraction of the ordinary share capital of another body corporate (“B”) and B directly or indirectly owns ordinary share capital of a third body corporate (“C”), A is treated as indirectly owning the amount of C's ordinary share capital given by the formula—
F
×
M
where—
F is the fraction of B's ordinary share capital that is owned by A, and
M is the amount of the ordinary share capital of C that is owned directly or indirectly by B.
(3) For the purposes of subsections (1) and (2), the amount of any ordinary share capital that is owned indirectly by B is calculated using subsection (1) or (2), or both, as appropriate.
(1) If A and C are bodies corporate and—
(a) A owns, through one or more bodies corporate (“the intermediaries in the first series”), a fraction of C's ordinary share capital, and
(b) A also owns a further fraction of C's ordinary share capital (or further fractions of C's ordinary share capital),
all those fractions are added together to find the amount of C's ordinary share capital that is owned by A.
(2) The reference in subsection (1)(b) to a further fraction of C's share capital is to a fraction of C's share capital that A owns—
(a) directly, or
(b) indirectly but through one or more bodies corporate which do not (together) constitute all of the intermediaries in the first series, or which include a body corporate that is not an intermediary in the first series.
(1) For the purposes of the Corporation Tax Acts a company is an “investment trust” with respect to an accounting period if—
(a) conditions A to C are met throughout the period, and
(b) the company is approved for the period by the Commissioners for Her Majesty's Revenue and Customs (see section 1159).
(2) Condition A is that all, or substantially all, of the business of the company is investing its funds in shares, land or other assets with the aim of spreading investment risk and giving members of the company the benefit of the results of the management of its funds.
(3) Condition B is that the shares making up the company's ordinary share capital (or, if there are such shares of more than one class, those of each class) are admitted to trading on a regulated market.
(4) For this purpose “regulated market” means—
(a) a UK regulated market within the meaning given by Article 2.1(13A) of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments,
(b) an EU regulated market within the meaning given by Article 2.1(13B) of that Regulation, and
(c) a Gibraltar regulated market within the meaning given by Article 26(11)(b)(i) of that Regulation.
(5) Condition C is that the company is not—
(a) a venture capital trust (within the meaning of Part 6 of ITA 2007), or
(b) a company UK REIT (within the meaning of Part 12 of this Act).
(6) The Treasury may by regulations provide—
(a) for one or both of conditions A and B to be treated as met in the cases, and subject to any conditions, specified in the regulations, and
(b) for the period for which the condition or conditions are treated as met.
(7) The Treasury may also by regulations amend subsection (3) or (4).
(8) A statutory instrument containing the first regulations under subsection (6) may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.
(9) Any other statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.
(1) The Treasury may by regulations make provision about the approval of a company for an accounting period for the purposes of section 1158(1)(b), including provision about—
(a) applications for approval,
(b) the determination of applications for approval,
(c) requirements to be met by the company while approved,
(d) the withdrawal of approval by notice, or
(e) the consequences of the withdrawal of approval.
(2) The regulations may, in particular—
(a) include provision under which an application for approval—
(i) is to be made by reference to the accounting period in which the application is made or such earlier or later accounting period as may be specified in the application, and
(ii) is to constitute an application for approval for that and all subsequent accounting periods,
(b) specify the form and content of, and information to accompany, an application,
(c) permit or require the Commissioners to grant or refuse an application where conditions specified in the regulations are met (or appear to the Commissioners to be met) in relation to the company,
(d) permit or require the Commissioners to withdraw approval where—
(i) conditions specified in the regulations are met (or appear to the Commissioners to be met) in relation to the company, or
(ii) the company has failed to comply with requirements imposed by the regulations,
(e) include provision prohibiting a company from which approval has been withdrawn from reapplying, or
(f) include provision under which approval may or must be withdrawn in relation to an accounting period that ends before the notice withdrawing approval is given.
(3) Regulations under this section—
(a) may make different provision for different cases or purposes, and
(b) may make incidental, consequential, supplementary or transitional provision.
(4) A statutory instrument containing the first regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.
(5) Any other statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.
(6) In this section “ the Commissioners ” means the Commissioners for Her Majesty's Revenue and Customs.
(1) In the application of the Corporation Tax Acts to Scotland—
“assignment” means assignation,
“estate in land” includes the land,
“mortgage” means—
a standard security, or
a heritable security, as defined in the Conveyancing (Scotland) Act 1924, but including a security constituted by ex facie absolute disposition or assignation, and
“surrender” includes renunciation.
(2) In the application of the Corporation Tax Acts to Scotland, any reference to property or rights being held on trust or on trusts is a reference to the property or rights being held in trust.
1167 Sources of income within the charge to corporation tax or income tax
In the Corporation Tax Acts, a source of income is within the charge to corporation tax or income tax if that tax—
(a) is chargeable on the income arising from it, or
(b) would be so chargeable if there were any income arising from it,
and references to a person, or income, being within the charge to corporation tax or income tax are to be read in the same way.
(1) For the purposes of the Corporation Tax Acts dividends are to be treated as paid on the date when they become due and payable.
(2) Subsection (1) is subject to any provision to the contrary.
(1) Chapter 2 of Part 9 of ITA 2007 (which relates to settlements and trustees) applies for the purposes of the Corporation Tax Acts as it applies for the purposes of the Income Tax Acts.
(2) See (in particular)—
(a) section 466 of that Act, which explains what is meant by references to settled property, and
(b) sections 467 to 473 of that Act, which explain what is meant by references to a settlor in relation to a settlement.
(1) This section applies to all powers under the Corporation Tax Acts of the Treasury or the Commissioners for Her Majesty's Revenue and Customs to make orders or regulations, other than excluded powers.
(2) All powers under the following are excluded—
(a) ICTA (see instead section 828 of that Act),
(b) TCGA 1992 (see instead section 287 of that Act),
(c) CAA 2001 (see instead section 570B of that Act),
(d) Part 4 of FA 2004 (see instead section 282 of that Act),
(e) CTA 2009 (see instead section 1310 of that Act),
(f) TIOPA 2010 (see instead section 499 of that Act), ...
(g) the following provisions of this Act—
(i) section 204(3) (markets in the United Kingdom on which shares or securities are dealt in), and
(ii) ... , and
(h) Parts 2 and 3 of FA 2012.
(3) Any power to which this section applies is exercisable by statutory instrument.
(4) Any statutory instrument containing any order or regulations made under a power to which this section applies is subject to annulment in pursuance of a resolution of the House of Commons.
(5) Subsection (4) does not apply in relation to any order or regulations made under—
(a) section 73A of FA 2004 (exemption for designated international organisations), or
(b) either of the following provisions of this Act—
(i) section 1120(2)(e) (designation of international organisations as banks), or
(ii) section 1180(2) (power to make transitional or saving provision in connection with the coming into force of this Act).
(6) Further, subsection (4) does not apply—
(a) if any other Parliamentary procedure is expressly provided to apply in relation to the order or regulations, or
(b) if the order or regulations provide for any provision of the Corporation Tax Acts to come into force or have effect in accordance with the order or regulations.
(7) Subsection (4) is also subject to any other provision to the contrary.
(1) Any apportionment to different periods which falls to be made under the Corporation Tax Acts is to be made on a time basis according to the respective lengths of the periods.
(2) Subsection (1) is subject to any provision to the contrary.
(1) In the Corporation Tax Acts references to any provision to which this section applies are references to any provision listed in the following table, so far as the provision relates to corporation tax (but subject to any applicable limitation in subsection (3)).
(2) This is the table—
PART 1
Provisions of CTA 2009 | Description
Chapter 15 of Part 3 | Post-cessation receipts: trades
Chapter 7 of Part 4 | Rent receivable in connection with a UK section 39(4) concern
Chapter 8 of Part 4 | Rent receivable for UK electric-line wayleaves
Chapter 9 of Part 4 | Post-cessation receipts: UK property businesses
Section 752 | Non-trading gains on intangible fixed assets
Section 908 | Profits from disposals of know-how
Section 912 | Profits from sales of patent rights
Section 965(4) | Adjustments after the administration period
Chapter 8 of Part 10 | Income not otherwise charged
Section 986(4), so far as it relates to an amount treated as received under section 998(3) | Withdrawal of deductions if approval for share incentive plan withdrawn: non-trading cases
. . . | . . .
Section 1229 | Management expenses: claw back of relief
Section 1252 | Industrial development grants: companies with investment business
Section 1253 | Contributions to local enterprise organisations or urban regeneration companies: disqualifying benefits
Section 1254 | Repayments under FISMA 2000
Section 1277(4) | Withdrawal of relief for unremittable foreign income after source ceases
PART 2
Provisions of this Act | Description
Section 538(3) | Real estate investment trusts: entry charge
Section 636(1) | Banks etc in compulsory liquidation
Section 779(2) | Loan or credit transactions
. . . | . . .
Section 851(8) | Sale and lease-back: taxation of consideration
Section 874(1) | Leased assets: capital sums
Section 1086(2) | Chargeable payments connected with exempt distributions
PART 3
Other provisions | Description
Section 56(2) of ICTA | Transactions in deposits
. . . | . . .
. . . | . . .
Section 571(1) of ICTA | Cancellation of tax certificates
Section 774(1) of ICTA | Transactions between dealing company and associated company
. . . | . . .
. . . | . . .
Section 256(2) of CAA 2001 | Life assurance business: capital allowances
Section 254(2) of TIOPA 2010 | Tax arbitrage: calculation or recalculation of income etc following receipt notice
Regulation 18(4) of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001) | Offshore income gains
(3) The reference in Part 1 of the above table to Chapter 8 of Part 10 of CTA 2009 does not include that Chapter so far as relating to income which arises from a source outside the United Kingdom.
In this Act—
“CAA 2001” means the Capital Allowances Act 2001,
“CTA 2009” means the Corporation Tax Act 2009,
“FA”, followed by a year, means the Finance Act of that year,
“F(No.2)A”, followed by a year, means the Finance (No.2) Act of that year,
“FISMA 2000” means the Financial Services and Markets Act 2000,
“ICTA” means the Income and Corporation Taxes Act 1988,
“ITA 2007” means the Income Tax Act 2007,
“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003,
“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005,
“TCGA 1992” means the Taxation of Chargeable Gains Act 1992,
“TIOPA 2010” means the Taxation (International and Other Provisions) Act 2010, and
“TMA 1970” means the Taxes Management Act 1970.
(1) Section 1122 (how to tell whether persons are connected) applies for the purposes of this Act unless otherwise indicated (whether expressly or by implication).
(2) Section 1124 (meaning of control in relation to a body corporate or partnership) applies for the purposes of this Act unless otherwise indicated (whether expressly or by implication).