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Corporation Tax Act 2010 2010 c. 4 An Act to restate, with minor changes, certain enactments relating to corporation tax and certain enactments relating to company distributions; and for connected purposes. [3rd March 2010] Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Propose a change(1) Part 2 is about calculation of the corporation tax chargeable on a company's profits, in particular— (a) the rates at which corporation tax on profits is charged (see Chapter 2), (b) ascertaining the amount of profits to which the rates of tax are applied (see Chapter 3), and (c) the currency in which profits are to be calculated and expressed (see Chapter 4). (2) Parts 3A to 7 make provision for the following reliefs— (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) relief for companies with small profits (other than ring-fence profits) (see Part 3A), (b) relief for trade losses (see Chapters 2 and 3 of Part 4), (c) relief for losses from property businesses (see Chapter 4 of Part 4), (d) relief for losses on a disposal of shares (see Chapter 5 of Part 4), (e) relief for losses from miscellaneous transactions (see Chapter 6 of Part 4), (f) group relief (see Part 5), (fa) group relief for carried-forward losses (see Part 5A), (g) relief for qualifying charitable donations (see Part 6), ... (ga) relief for expenditure on grassroots sport (see Part 6A), and (h) community investment tax relief (see Part 7). (2A) Part 7ZA contains provision restricting the amount of certain deductions which may be made in calculating the profits of a company on which corporation tax is chargeable. (3) Parts 7A to 13 make provision about special types of business and company etc, in particular— (za) banking companies (see Part 7A), (a) oil activities (see Part 8), (aa) oil contractor activities (see Part 8ZA), (ab) profits arising from the exploitation of patents etc (see Part 8A), (ac) trading profits taxable at Northern Ireland rate (see Part 8B), (ad) restitution interest (see Part 8C), (b) leasing plant or machinery (see Part 9), (c) close companies (see Part 10), (d) charitable companies etc (see Part 11), (e) Real Estate Investment Trusts (see Part 12), (f) corporate beneficiaries under trusts (see Chapter 1 of Part 13), (g) open-ended investment companies, authorised unit trusts and court investment funds (see Chapter 2 of Part 13), (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (i) securitisation companies (see Chapter 4 of Part 13), (j) companies in liquidation or administration (see Chapter 5 of Part 13), (k) banks etc in compulsory liquidation (see Chapter 6 of Part 13), (l) co-operative housing associations and self-build societies (see Chapters 7 and 8 of Part 13), and (m) community amateur sports clubs (see Chapter 9 of Part 13). (4) Parts 14 to 21C contain provisions relating to tax avoidance, in particular with respect to— (a) change in company ownership (see Part 14), (aa) transfer of deductions (see Part 14A), (ab) carried-forward losses (see Part 14B), (b) transactions in securities (see Part 15), (c) factoring of income (see Part 16), (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (da) manufactured dividends (see Part 17A), (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (f) the sale and lease-back of assets (see Part 19), (g) leasing plant or machinery (see Part 20), ... (h) other arrangements involving asset leasing (see Part 21) ... (i) risk transfer schemes (see Part 21A). (j) group mismatch schemes (see Part 21B)., and (ja) tax mismatch schemes (see Part 21BA), (k) tainted donations made to charities (see Part 21C). (5) Part 22 contains miscellaneous provisions, including provision with respect to— (a) transfers of trade without a change of ownership (see Chapter 1), (b) transfers of trade to obtain balancing allowances (see Chapter 2), (c) transfer of relief within partnerships (see Chapter 3), (d) the surrender of tax refunds within groups of companies (see Chapter 4), (e) the set off of income tax deductions against corporation tax (see Chapter 5), (f) the assessment, collection and recovery of corporation tax from UK representatives of non-UK resident companies (see Chapter 6), (g) the recovery of unpaid corporation tax due from non-UK resident companies (see Chapter 7), and (h) exemptions (see Chapter 8). (6) Part 23 contains provisions about the meaning of “distribution” and certain associated matters. (7) Part 24 contains definitions that apply for the purposes of the Corporation Tax Acts and other general provisions that have effect for the purposes of those Acts. (8) Part 25 contains provisions of general application, including definitions for the purposes of the Act. (9) For abbreviations and defined expressions used in this Act, see section 1174 and Schedule 4.
Propose a change(1) This Part contains provisions that relate to the calculation of the corporation tax chargeable on a company's profits of an accounting period. (2) Chapter 2 is about the rates at which corporation tax on profits is charged. (3) Chapter 3 is about ascertaining the amount of a company's profits of an accounting period to which the rates of corporation tax applicable to the company are applied. (4) Chapter 4 makes provision about the currency in which a company must calculate and express its profits for corporation tax purposes. (5) For provision about the calculation of the corporation tax payable for an accounting period see paragraph 8 of Schedule 18 to FA 1998.
Propose a change(1) Corporation tax is charged at the rate set by Parliament for the financial year as the main rate. (2) Subsection (1) is subject to— (a) section 18A (which provides for tax to be charged at the standard small profits rate instead of the main rate in certain cases), and (b) any other provision of the Corporation Tax Acts which provides for corporation tax to be charged at a different rate.
Propose a change(1) In the calculation under paragraph 8(1) of Schedule 18 to FA 1998 of the amount of corporation tax payable for an accounting period of a company, the first step is to apply the rate or rates of corporation tax applicable to the profits of the company of the period on which tax is chargeable. (2) The profits of a company of an accounting period on which corporation tax is chargeable (in this Act referred to as the company's taxable total profits of the period) are found as follows— Step 1 Find the company's total profits of the period (see subsection (3)). Step 2 Deduct from the result of Step 1 any amounts which can be relieved against the company's total profits of the period. (3) To find a company's total profits of an accounting period take the following steps. Step 1 Find the amount in respect of which the company is chargeable for the period under the charge to corporation tax on income after any reduction required to give effect to relief from tax. Step 2 Add to the result of Step 1 any amount to be included in respect of chargeable gains in the company's total profits of the accounting period (see section 8 of TCGA 1992) after any reduction required to give effect to relief from tax. (4) Subsections (2) and (3) are subject to the provisions of the Corporation Tax Acts.
Propose a change(1) For corporation tax purposes the income and chargeable gains of a company for an accounting period must be calculated and expressed in sterling. (2) See the following sections for provision about the application of subsection (1) in certain cases where profits or losses fall to be calculated in accordance with generally accepted accounting practice— section 6 (UK resident company operating in sterling and preparing accounts in another currency), section 7 (UK resident company operating in currency other than sterling and preparing accounts in another currency), section 8 (UK resident company preparing accounts in currency other than sterling), section 9 (non-UK resident company preparing accounts in currency other than sterling). (3) See section 9C for provision about the application of subsection (1) so far as it relates to calculating chargeable gains.
Propose a change(1) This section applies if, for a period of account, in accordance with generally accepted accounting practice, a UK resident company (other than a UK resident investment company)— (a) prepares its accounts in a currency other than sterling, and (b) in those accounts identifies sterling as its functional currency. (1A) This section also applies if, for a period of account, a UK resident investment company— (a) in accordance with generally accepted accounting practice, prepares its accounts in a currency other than sterling, and (b) either— (i) has sterling as its designated currency for that period of account (see sections 9A and 9B), or (ii) if it does not have a designated currency for that period, in those accounts identifies sterling as its functional currency in accordance with generally accepted accounting practice. (2) Profits or losses of the company for the period that fall to be calculated in accordance with generally accepted accounting practice for corporation tax purposes must be calculated in sterling as if the company prepared its accounts in sterling.
Propose a change(1) This section applies if, for a period of account, in accordance with generally accepted accounting practice— (a) a UK resident company (other than a UK resident investment company) prepares its accounts in one currency, (b) in those accounts it identifies another currency as its functional currency, and (c) that other currency is not sterling. (1A) This section also applies if, for a period of account, a UK resident investment company— (a) in accordance with generally accepted accounting practice, prepares its accounts in one currency, (b) either— (i) has another currency as its designated currency for that period (see sections 9A and 9B), or (ii) if it does not have a designated currency for that period, in those accounts identifies another currency as its functional currency in accordance with generally accepted accounting practice, and (c) that other currency is not sterling. (2) Profits or losses of the company for the period that fall to be calculated in accordance with generally accepted accounting practice for corporation tax purposes must be calculated in sterling as follows— Step 1 Calculate those profits or losses in the relevant currency as if the company prepared its accounts in that currency. Step 2 Take the sterling equivalent of those profits or losses (see section 11). (3) If this section applies, assume that any sterling amount mentioned in the Corporation Tax Acts is its equivalent expressed in the relevant currency of the company. (4) In subsections (2) and (3) “ the relevant currency ” means the currency other than sterling referred to in subsection (1)(c) or (1A)(c).
Propose a change(1) This section applies if, for a period of account— (a) a UK resident company prepares its accounts in a currency other than sterling (the “accounts currency”), and (b) neither section 6 nor section 7 applies. (2) Profits or losses of the company for the period that fall to be calculated in accordance with generally accepted accounting practice for corporation tax purposes must be calculated in sterling as follows— Step 1 Calculate those profits or losses in the accounts currency. Step 2 Take the sterling equivalent of those profits or losses (see section 11). (3) If this section applies, assume that any sterling amount mentioned in the Corporation Tax Acts is its equivalent expressed in the accounts currency of the company.
Propose a change(1) This section applies if a non-UK resident company within the charge to corporation tax prepares its return of accounts for a period of account in a currency other than sterling (the “accounts currency”). (2) Profits or losses of the company for the period that fall to be calculated in accordance with generally accepted accounting practice for corporation tax purposes must be calculated in sterling as follows— Step 1 Calculate those profits or losses in the accounts currency. Step 2 Take the sterling equivalent of those profits or losses (see section 11). (3) If this section applies, assume that any sterling amount mentioned in the Corporation Tax Acts is its equivalent expressed in the accounts currency of the company. (4) The reference in subsection (1) to the company's “return of accounts” is to a return of such accounts ... as may be required under paragraph 3 of Schedule 18 to FA 1998 (company tax returns).
Propose a change(1) The designated currency of a UK resident investment company is the currency which the company elects as its designated currency. (2) An election under this section by a company (“X”) takes effect only if, at the time when it is to take effect (see section 9B(1))— (a) X is a UK resident investment company, and (b) Condition A or Condition B is met. (2A) For the purposes of determining whether an election under this section takes effect, ignore the effect (if any) of Part 4 of TIOPA 2010 (transfer pricing). (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) Condition A is that a significant proportion of X's assets and liabilities are denominated in the currency. (5) Condition B is that— (a) the currency is the functional currency of another company, and (b) it is reasonable to assume that the two companies will meet the consolidation condition. (6) X and another company (“Y”) meet the consolidation condition at any time if— (a) for a period which includes that time, the financial results of X are comprised in financial statements of Y's group prepared in accordance with acceptable accounting practice, or (b) if no financial statements of the group are prepared in accordance with acceptable accounting practice for a period which includes that time, the financial results of X would be comprised in financial statements of Y's group for a period which includes that time if such statements were prepared in accordance with international accounting standards. (7) In subsection (6)— “ financial statements of the group ” means consolidated financial statements of Y and its subsidiaries (and for this purpose “subsidiaries” has the meaning given by international accounting standards), “Y's group” means a worldwide group of which Y is the ultimate parent within the meaning of Part 10 of TIOPA 2010, “ acceptable accounting practice ” means— international accounting standards, UK generally accepted accounting practice, or accounting practice which is generally accepted in the country in which Y is resident. (8) A currency is the designated currency of X for a period of account if the election in respect of that currency has effect throughout that period (see section 9B). (9) In relation to any period of account for which a currency is X's designated currency as a result of an election under this section, profits or losses of X that fall to be calculated in accordance with generally accepted accounting practice for corporation tax purposes must be calculated as if— (a) the designated currency were the functional currency of the company, and (b) no part of X's business could, in accordance with generally accepted accounting practice, be regarded as having another currency as its functional currency.
Propose a change(1) An election under section 9A takes effect at the beginning of the day specified in the election as the day on which it takes effect (which must be later than the day on which the election is made). (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) An election under section 9A may be revoked by notice of the revocation being given to an officer of Revenue and Customs before the election takes effect. (4) Subject to that, an election has effect until immediately before— (a) the day on which another election by X takes effect, or (b) the day on which a revocation event occurs, (whichever first occurs). (5) A revocation event occurs in a period of account (other than a period to which subsection (6) applies) if, at any time during that period— (a) it is not the case that a significant proportion of X's assets and liabilities are denominated in the currency to which the election relates, and (b) it is not the case that the currency is the functional currency of another company which, with X, met the consolidation condition (within the meaning of section 9A(6)) at any time during the preceding period of account. (6) A revocation event occurs in the period of account in which X's first accounting period begins if— (a) Condition A and not Condition B is satisfied at the beginning of that accounting period, and (b) the condition in subsection (5)(a) is met at any time during the period of account but after the first accounting period begins. (6A) A revocation event also occurs in a period of account (whether or not a period to which subsection (6) applies) if, at any time during that period, X ceases to be a UK resident investment company. (7) Subsections (8) and (9) apply if a period of account of X (“the straddling period of account”) begins before, and ends on or after, the day on which— (a) an election under section 9A takes effect, or (b) a revocation event occurs. (8) It is to be assumed, for the purposes of this Chapter, that the straddling period of account consists of two separate periods of account— (a) the first beginning with the straddling period of account and ending immediately before that day, and (b) the second beginning with that day and ending with the straddling period of account, and X's profits and losses are to be computed accordingly for the purposes of corporation tax. (9) For those purposes, it is to be assumed— (a) that X prepares its accounts for each of the two periods in the same currency, and otherwise on the same basis, as it prepares its accounts for the straddling period of account, and (b) that if the accounts for the straddling period of account, in accordance with generally accepted accounting practice, identify a currency as X's functional currency, the accounts for each of the two periods do likewise. (10) In this section references to “X” are to be construed in accordance with section 9A.
Propose a change(1) This section applies if— (a) a company disposes of an asset which is a ship, an aircraft, shares or an interest in shares, and (b) at any time beginning with the company's acquisition of the asset (or, if earlier, the time allowable expenditure was first incurred in respect of the asset) and ending with the disposal, the company's relevant currency is not sterling. (2) A company's relevant currency at any time is its functional currency at that time, subject to subsection (3). (3) If, at any time— (a) a company is a UK resident investment company, and (b) the company has a designated currency (see sections 9A and 9B) which is different from its functional currency, the company's relevant currency at that time is that designated currency. (4) If the relevant currency of the company at the time of the disposal is not sterling, the chargeable gain or loss accruing to the company on the disposal must be calculated as follows— Step 1 Calculate the chargeable gain or loss in the relevant currency of the company at the time of the disposal. Step 2 Translate the amount of the chargeable gain or loss into sterling by reference to the spot rate of exchange on the day of the disposal. (5) In any case, subsections (6) to (10) apply for the purposes of calculating the chargeable gain or loss. (6) Where any allowable expenditure is incurred in a currency which is not the company's relevant currency at the time it is incurred, that expenditure is to be translated into that relevant currency by reference to the spot rate of exchange for the day on which it is incurred. (7) Where, at any time after any allowable expenditure is incurred but before the asset is disposed of, there is a change in the company's relevant currency, that expenditure is to be translated (or, if it has previously been translated under this section, further translated) into the relevant currency of the company immediately following the change, by reference to the spot rate of exchange for the day of the change. (8) Any amount of consideration for the disposal which is given in a currency other than the company's relevant currency is to be translated into that relevant currency by reference to the spot rate of exchange on the day of disposal. (9) For the purposes of subsections (6) and (7)— (a) any translation of expenditure under subsection (6) is to be done before any translation of the expenditure under subsection (7), and (b) if subsection (7) applies as a result of more than one change in the company's relevant currency, it is to be applied in relation to each change in the order the changes were made (with the earliest first). (10) Where, by virtue of any enactment, the company was at any time treated for the purposes of corporation tax on chargeable gains as acquiring the asset— (a) for a consideration of such amount as would secure that neither a gain nor a loss would accrue to the person disposing of the asset, or (b) for a consideration equal to the market value of the asset, for the purposes of this section that allowable expenditure is treated as incurred by the company at that time. (11) For the purposes of this section, a reference to a ship or aircraft includes a reference to the benefit of a contract— (a) to which section 67 of CAA 2001 applies, and (b) which relates to plant or machinery which is a ship or aircraft. (12) In this section— “allowable expenditure” means expenditure which, immediately before the disposal, was attributable to the asset under section 38(1)(a) to (c) of TCGA 1992; “interest in shares” has the same meaning as in Schedule 7AC to TCGA 1992 (see paragraph 29 of that Schedule); “shares” includes stock.
Propose a change(1) Subsection (2) applies if, for the purposes of calculating the profits or losses of a company arising in an accounting period, section 7(3), 8(3) or 9(3) requires a sterling amount to be translated into its equivalent expressed in another currency. (2) The translation must be made by reference to— (a) the average exchange rate for the accounting period, or (b) the rate mentioned in subsection (3). (3) That rate is— (a) if the amount to be translated relates to a single transaction, an appropriate spot rate of exchange for the transaction, or (b) if the amount to be translated relates to more than one transaction, a rate of exchange derived on a just and reasonable basis from appropriate spot rates of exchange for those transactions.
Propose a change(1) Subsection (2) applies if, for the purposes of calculating the profits or losses of a company arising in an accounting period, section 7(2), 8(2) or 9(2) requires a profit or loss to be translated into its sterling equivalent. (2) The translation must be made by reference to— (a) the average exchange rate for the accounting period, or (b) the rate mentioned in subsection (3). (3) That rate is— (a) if the amount to be translated relates to a single transaction, an appropriate spot rate of exchange for the transaction, or (b) if the amount to be translated relates to more than one transaction, a rate of exchange derived on a just and reasonable basis from appropriate spot rates of exchange for those transactions. (4) Subsection (2) is subject to sections 12 and 13 (special rules where the translation is for the purpose of calculating carried-forward or carried-back amounts).
Propose a change(1) This section applies if, for the purpose of calculating a carried-back amount in respect of a company, a loss (“the loss”) is required by section 7(2), 8(2) or 9(2) to be translated into its sterling equivalent. (2) The translation must be made in accordance with whichever of the rules 1, 2 and 3 is applicable (see the table below). Rule 1 applies if the later tax calculation currency is the same as the earlier tax calculation currency. | Rule 1 is that the loss must be translated into its sterling equivalent by reference to the same rate of exchange as that at which the profit against which the carried-back amount is to be set off is required to be translated under section 11. Rule 2 applies if— the later tax calculation currency is not the same as the earlier tax calculation currency, and the earlier tax calculation currency is sterling. | Rule 2 is that the loss must be translated into its sterling equivalent by reference to the spot rate of exchange for the last day of the relevant accounting period. Rule 3 applies if— the later tax calculation currency is not the same as the earlier tax calculation currency, and the earlier tax calculation currency is a currency other than sterling. | Rule 3 is that the loss must be translated into its sterling equivalent by— being translated into the earlier tax calculation currency by reference to the spot rate of exchange for the last day of the relevant accounting period, and then being translated into sterling by reference to the same rate of exchange as that at which the profit against which the carried-back amount is to be set off is required to be translated under section 11. (3) In the table in subsection (2)— “the earlier tax calculation currency” means the tax calculation currency of the company in the accounting period to which the carried-back amount is to be carried back, “the later tax calculation currency” means the tax calculation currency of the company in the accounting period in which the loss arises, and “the relevant accounting period” means the latest accounting period of the company that both— ends before the accounting period in which the loss arises, and is a period in which the tax calculation currency of the company is the same as the earlier tax calculation currency.
Propose a change(1) This section applies if, for the purpose of calculating a carried-forward amount in respect of a company, a loss (“the loss”) is required by section 7(2), 8(2) or 9(2) to be translated into its sterling equivalent. (2) The translation must be made in accordance with whichever of rules 1, 2 and 3 is applicable (see the table below). Rule 1 applies if the earlier tax calculation currency is the same as the later tax calculation currency. | Rule 1 is that the loss must be translated into its sterling equivalent by reference to the same rate of exchange as that at which the profit against which the carried-forward amount is to be set off is required to be translated under section 11. Rule 2 applies if— the earlier tax calculation currency is not the same as the later tax calculation currency, and the later tax calculation currency is sterling. | Rule 2 is that the loss must be translated into its sterling equivalent by reference to the spot rate of exchange for the first day of the relevant accounting period. Rule 3 applies if— the earlier tax calculation currency is not the same as the later tax calculation currency, and the later tax calculation currency is a currency other than sterling. | Rule 3 is that the loss must be translated into its sterling equivalent by— being translated into the later tax calculation currency by reference to the spot rate of exchange for the first day of the relevant accounting period, and then being translated into sterling by reference to the same rate of exchange as that at which the profit against which the carried-forward amount is to be set off is required to be translated under section 11. (3) In the table in subsection (2)— “the earlier tax calculation currency” means the tax calculation currency of the company in the accounting period in which the loss arises, “the later tax calculation currency” means the tax calculation currency of the company in the accounting period to which the carried-forward amount is to be carried forward, and “the relevant accounting period” means the earliest accounting period of the company that both— begins after the accounting period in which the loss arises, and is a period in which the tax calculation currency of the company is the same as the later tax calculation currency.
Propose a change(1) This section applies if conditions A, B and C are met. (2) Condition A is that, in accordance with generally accepted accounting practice, a UK resident company— (a) prepares its accounts for a period of account in sterling, or (b) prepares its accounts for a period of account in a currency other than sterling and in those accounts identifies sterling as its functional currency. (3) Condition B is that a loss of the company for that period (“the loss”) which falls to be calculated in accordance with generally accepted accounting practice for corporation tax purposes is to be a carried-back amount. (4) Condition C is that the tax calculation currency of the company in the accounting period to which the loss is to be carried back (“the earlier tax calculation currency”) is a currency other than sterling. (5) The loss must be adjusted by— (a) first being translated into the earlier tax calculation currency by reference to the spot rate of exchange for the last day of the relevant accounting period, and (b) then being translated into sterling by reference to the same rate of exchange as that at which the profit against which the carried-back amount is to be set off is required to be translated under section 11. (6) In this section “the relevant accounting period” means the latest accounting period of the company that both— (a) ends before the accounting period in which the loss arises, and (b) is a period in which the tax calculation currency of the company is the currency mentioned in subsection (4).
Propose a change(1) This section applies if conditions A, B and C are met. (2) Condition A is that, in accordance with generally accepted accounting practice, a UK resident company— (a) prepares its accounts for a period of account in sterling, or (b) prepares its accounts for a period of account in a currency other than sterling and in those accounts identifies sterling as its functional currency. (3) Condition B is that a loss of the company for that period (“the loss”) which falls to be calculated in accordance with generally accepted accounting practice for corporation tax purposes is to be a carried-forward amount. (4) Condition C is that the tax calculation currency of the company in the accounting period to which the loss is to be carried forward (“the later tax calculation currency”) is a currency other than sterling. (5) The loss must be adjusted by— (a) first being translated into the later tax calculation currency by reference to the spot rate of exchange for the first day of the relevant accounting period, and (b) then being translated into sterling by reference to the same rate of exchange as that at which the profit against which the carried-forward amount is to be set off is required to be translated under section 11. (6) In this section “the relevant accounting period” means the earliest accounting period of the company that both— (a) begins after the accounting period in which the loss arises, and (b) is a period in which the tax calculation currency of the company is the currency mentioned in subsection (4).
Propose a change(1) This section is about the interpretation of the references in sections 13(2) and 15(5) to the profit against which a carried-forward amount is to be set off, in a case where the carried-forward amount— (a) is one that is treated as arising in an accounting period later than that in which it in fact arises, and (b) is accordingly deductible in calculating a profit for that later period. (2) In such a case, the references are to be read as references to the profit in calculating which the amount is deductible, disregarding the deduction.
Propose a change(1) References in this Chapter to the accounts of a UK resident company are to— (a) the annual accounts of the company required by Part 15 of the Companies Act 2006, or (b) if the company is not required to prepare such accounts, the accounts which it is required to keep under the law of the territory under whose laws the company is incorporated, or (c) if the company is not required to keep accounts as mentioned in paragraph (a) or (b), those accounts of the company that most closely correspond to accounts which it would have been required to prepare if the provisions of Part 15 of the Companies Act 2006 applied to it. (2) In this Chapter “carried-back amount” means— (a) an amount carried back under section 37 (relief for trade losses against total profits), (aa) an amount carried back under section 45F (relief for terminal trade losses), (b) an amount carried back under section 389(2) of CTA 2009 (deficits of insurance companies), or (c) an amount carried back by virtue of a claim under section 459(1)(b) or 463B(1)(b) of CTA 2009 (non-trading deficits from loan relationships). (3) In this Chapter “carried-forward amount” means— (a) an amount carried forward under section 45 (carry forward of pre-1 April 2017 trade loss against subsequent trade profits), (aa) an amount carried forward under section 45A (carry forward of post 1-April 2017 trade loss against total profits), (ab) an amount carried forward under section 45B (carry forward of post-1 April 2017 trade loss against subsequent trade profits), (b) an amount carried forward under section 62(5) (UK property business losses), (c) an amount carried forward under section 63(3) (company with investment business ceasing to carry on a UK property business), (d) an amount carried forward under 66(3) (overseas property business losses), (e) an amount carried forward under section 91(6) (losses from miscellaneous transactions), (f) an amount carried forward under section 73 or 93 of FA 2012 for use at step 5 in section 76 of that Act (the I - E basis for insurance companies), (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (h) an amount carried forward under section 391(2) of CTA 2009 (deficits of insurance companies), (i) an amount carried forward under section 457(3) , 463G(6) or 463H(4) of CTA 2009 (non-trading deficits from loan relationships), (j) an amount carried forward under section 753(3) of CTA 2009 (non-trading loss on intangible fixed assets), (k) an amount carried forward under section 925(3) of CTA 2009 (patent income: relief for expenses), or (l) an amount carried forward under section 1223 of CTA 2009 (expenses of management and other amounts). (3A) In this Chapter “investment company” means a company whose business consists wholly or mainly in the making of investments and the principal part of whose income is derived from those investments. (4) References in this Chapter to the functional currency of a company or of part of a company's business are references to the currency of the primary economic environment in which the company or part operates. (5) References in this Chapter to the tax calculation currency of a company in an accounting period are to the currency in which profits or losses of the company arising in that period that fall to be calculated in accordance with generally accepted accounting practice for corporation tax purposes are required to be calculated by virtue of section 5(1), section 6(2), Step 1 of section 7(2), Step 1 of section 8(2) or Step 1 of section 9(2).
Propose a change(1) Corporation tax is charged at the standard small profits rate on a company's taxable total profits of an accounting period which are not ring fence profits if— (a) the company is UK resident in the accounting period, (b) it is not a close investment-holding company in the period, and (c) its augmented profits of the accounting period do not exceed the lower limit. (2) In this Act “the standard small profits rate” means a rate that— (a) is lower than the main rate, and (b) is set by Parliament for the financial year as the standard small profits rate. (3) In this Part “ring fence profits” has the same meaning as in Part 8 (see section 276). (4) In the case of a company with ring fence profits, see section 279A(3) (small ring fence profits rate chargeable on ring fence profits).
Propose a change(1) This section applies if— (a) a company is UK resident in an accounting period, (b) it is not a close investment-holding company in the period, (c) its augmented profits of the accounting period exceed the lower limit but do not exceed the upper limit, and (d) its augmented profits of the accounting period do not include any ring fence profits. (2) The corporation tax charged on the company's taxable total profits of the accounting period is reduced by an amount equal to— F × ( U − A ) × N A where— F is the standard marginal relief fraction, U is the upper limit, A is the amount of the augmented profits, and N is the amount of the taxable total profits. (3) In this Act “the standard marginal relief fraction” means the fraction set by Parliament for the financial year as the standard marginal relief fraction for the purposes of this Part.
Propose a changeIn the case of a company with ring fence profits— (a) see section 279B (if the company's augmented profits of an accounting period consist exclusively of ring fence profits), and (b) see section 279C (if the company's augmented profits of an accounting period consist of both ring fence profits and other profits).
Propose a change(1) This section gives the meaning in this Part of “the lower limit” and “the upper limit” in relation to an accounting period of a company (“C”). (2) If C has no associated company in the accounting period— (a) the lower limit is £50,000, and (b) the upper limit is £250,000. (3) If C has one or more associated companies in the accounting period— (a) the lower limit is— £ 50,000 ( 1 + N ) (b) the upper limit is— £ 250,000 ( 1 + N ) where N is the number of those associated companies. (4) For an accounting period of less than 12 months the lower limit and the upper limit are proportionately reduced.
Propose a change(1) For the purposes of section 18D, a company is another company's associated company in an accounting period if it is an associated company (see subsection (4)) for any part of the accounting period. (2) The rule in subsection (1) applies to each of two or more associated companies even if they are associated companies for different parts of the accounting period. (3) But an associated company is ignored for the purposes of section 18D if— (a) it has not carried on a trade or business at any time in the accounting period, or (b) it was an associated company for part only of the accounting period and has not carried on a trade or business at any time in that part of the accounting period. (4) For the purposes of this Part, a company is an associated company of another at any time when— (a) one of the two has control of the other, or (b) both are under the control of the same person or persons. (5) In subsection (4) “control” has the same meaning as in Part 10 (see sections 450 and 451). (6) In this section— (a) subsection (3) is subject to section 18F, and (b) subsections (4) and (5) are subject to sections 18G to 18J.
Propose a change(1) Subsection (2) applies if a company carries on a business of making investments in an accounting period and throughout the period the company— (a) carries on no trade, (b) has one or more 51% subsidiaries, and (c) is a passive company. (2) The company is treated for the purposes of section 18E(3) as not carrying on a business at any time in the accounting period. (3) A company is a passive company throughout an accounting period only if the following requirements are met— (a) it has no assets in that period, other than shares in companies which are its 51% subsidiaries, (b) no income arises to it in that period other than dividends, (c) if income arises to it in that period in the form of dividends— (i) the redistribution condition is met (see subsection (4)), and (ii) the dividends are exempt distributions of a qualifying kind received by it (see subsection (5)), (d) no chargeable gains accrue to it in that period, (e) no expenses of management of the business mentioned in subsection (1) are referable to that period, and (f) no qualifying charitable donations are deductible from the company's total profits of that period. (4) The redistribution condition is that— (a) the company pays dividends to one or more of its shareholders in the accounting period, and (b) the total amount paid in the form of those dividends is at least equal to the amount of the income arising to the company in the form of dividends in that period. (5) For the purposes of this section a distribution is an “exempt distribution of a qualifying kind” if— (a) it is a distribution for the purposes of the Corporation Tax Acts because (and only because) it falls within paragraph A, B, G or H in section 1000(1), and (b) it is exempt for the purposes of Part 9A of CTA 2009 (company distributions). (6) If income arises to a company in an accounting period in the form of a dividend and the requirement in subsection (3)(c) is met in respect of the income— (a) neither the dividend nor any asset representing it is treated as an asset of the company in that accounting period for the purposes of subsection (3)(a), and (b) no right of the company to receive the dividend is treated as an asset of the company for the purposes of subsection (3)(a) in that period or any earlier accounting period.
Propose a change(1) This section applies if— (a) it is necessary to determine in accordance with section 18E(4) and (5) whether a company is an associated company of another company, and (b) the relationship between the two companies is not one of substantial commercial interdependence. (2) In the application of section 451 (meaning of “control”: rights to be attributed) for the purposes of the determination, any person to whom rights and duties fall to be attributed under subsections (4) and (5) of that section is to be treated, for the purposes of those subsections, as having no associates. (3) The Treasury may by regulations prescribe factors that are to be taken into account in determining whether a relationship between two companies amounts to substantial commercial interdependence for the purposes of this section.
Propose a change(1) In determining for the purposes of section 18E(4) whether a company is under the control of another, fixed-rate preference shares held by a company are ignored if the company holding them— (a) is not a close company, (b) takes no part in the management or conduct of the company which issued the shares, or in the management or conduct of its business, and (c) subscribed for the shares in the ordinary course of a business which includes the provision of finance. (2) In this section “fixed-rate preference shares” means shares which— (a) were issued wholly for new consideration, (b) do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities, and (c) do not carry any right to dividends other than dividends which— (i) are of a fixed amount or at a fixed rate per cent of the nominal value of the shares, and (ii) together with any sum paid on redemption, represent no more than a reasonable commercial return on the consideration for which the shares were issued. (3) In subsection (2)(a) “new consideration” has the meaning given by section 1115.
Propose a change(1) A company (“A”) is not under the control of another company (“B”) for the purposes of section 18E(4) if— (a) B is a loan creditor of A, (b) there is no other connection between A and B, and (c) either— (i) B is not a close company, or (ii) B's relationship to A as a loan creditor arose in the ordinary course of a business which B carries on. (2) Subsection (3) applies if— (a) two companies (“A” and “B”) are controlled by the same person who is a loan creditor of each of them, (b) there is no other connection between A and B, and (c) either— (i) the loan creditor is a company which is not a close company, or (ii) the loan creditor's relationship to each of A and B as a loan creditor arose in the ordinary course of a business which the loan creditor carries on. (3) In determining for the purposes of this Part whether A and B are associated with each other, rights which the loan creditor has as a loan creditor of A, or as a loan creditor of B, are ignored. (4) In subsection (2)(a) “control” has the same meaning as in section 18E(4). (5) In this section— (a) “connection” includes a connection in the past as well as a connection in the present, and (b) references to a connection between two companies include any dealings between them. (6) In this section references to a loan creditor of a company are to be read in accordance with section 453.
Propose a change(1) Subsection (2) applies if— (a) two companies (“A” and “B”) are controlled by the same person by virtue of rights or powers (or both) held in trust by that person, and (b) there is no other connection between A and B. (2) In determining for the purposes of this Part whether A and B are associated with each other, the rights and powers mentioned in subsection (1)(a) are ignored. (3) In subsection (1)— (a) “control” has the same meaning as in section 18E(4), (b) “connection” includes a connection in the past as well as a connection in the present, and (c) the reference to a connection between A and B includes any dealings between them.
Propose a change(1) This section applies if a company (“the issuing company”) appears to an officer of Revenue and Customs to be a close company. (2) The officer may, for the purposes of this Part, by notice require the issuing company to provide the officer with— (a) particulars of any bearer securities issued by the company, (b) the names and addresses of the persons to whom the securities were issued, and (c) details of the amounts issued to each person. (3) The officer may, for the purposes of this Part, by notice require— (a) any person to whom bearer securities were issued by the company, or (b) any person to or through whom bearer securities issued by the company were subsequently sold or transferred, to provide any further information that the officer reasonably requires with a view to enabling the officer to find out the names and addresses of the persons beneficially interested in the securities. (4) In this section— “loan creditor” has the meaning given by section 453, and “securities” includes— shares, stocks, bonds, debentures and debenture stock, and any promissory note or other instrument evidencing indebtedness to a loan creditor of the company.
Propose a change(1) For the purposes of this Part a company's “augmented profits” of an accounting period are— (a) the company's taxable total profits of that period, plus (b) any exempt distributions of a qualifying kind received by the company (“R”) that are not excluded. (2) For the purposes of this section a distribution is an “exempt distribution of a qualifying kind” if— (a) it is a distribution for the purposes of the Corporation Tax Acts because (and only because) it falls within paragraph A, B, G or H in section 1000(1), and (b) it is exempt for the purposes of Part 9A of CTA 2009 (company distributions). (3) For the purposes of this section a distribution which R receives from a company (“C”) is excluded if— (a) C is a 51% subsidiary of R or of a company of which R is a 51% subsidiary, or (b) C is a trading company or relevant holding company that is a quasi-subsidiary of R. (4) Section 18M— (a) makes further provision for determining whether a company is a 51% subsidiary of another for the purposes of subsection (3), and (b) defines expressions used in that subsection.
Propose a change(1) This section applies for the purposes of section 18L(3). (2) In addition to meeting the requirements of section 1154(2), a company (“A”) is a 51% subsidiary of another company (“B”) only at times when— (a) B would be beneficially entitled to more than 50% of any profits available for distribution to equity holders of A, and (b) B would be beneficially entitled to more than 50% of any assets of A available for distribution to its equity holders on a winding up. (3) In determining whether or not a company is a 51% subsidiary of another company (“C”), C is treated as not owning share capital if— (a) it owns the share capital indirectly, (b) the share capital is owned directly by a company (“D”), and (c) a profit on the sale of the shares would be a trading receipt for D. (4) A company is a “trading company” if its business consists wholly or mainly of carrying on one or more trades. (5) A company is a “relevant holding company” if its business consists wholly or mainly of holding shares in or securities of trading companies (as defined by subsection (4)) that are its 90% subsidiaries. (6) A company is a “quasi-subsidiary” of R if— (a) it is owned by a consortium of which R is a member, (b) it is not a 75% subsidiary of any company, and (c) no arrangements of any kind (whether in writing or not) exist as a result of which it could become a 75% subsidiary of any company. (7) A company is owned by a consortium if at least 75% of the company's ordinary share capital is beneficially owned by two or more companies each of which— (a) beneficially owns at least 5% of that capital, (b) would be beneficially entitled to at least 5% of any profits available for distribution to equity holders of the company, and (c) would be beneficially entitled to at least 5% of any asset of the company available for distribution to its equity holders on a winding up. (8) The companies meeting those conditions are called the members of the consortium. (9) Chapter 6 of Part 5 (equity holders and profits or assets available for distribution) applies for the purposes of this section as it applies for the purposes of section 151(4)(a) and (b).
Propose a change(1) For the purposes of this Part, a close company (“the candidate company”) is a close investment-holding company in an accounting period unless throughout the period it exists wholly or mainly for one or more of the permitted purposes set out in subsection (2). There is an exception to this rule in subsection (5). (2) The candidate company exists for a permitted purpose so far as it exists— (a) for the purpose of carrying on a trade or trades on a commercial basis, (b) for the purpose of making investments in land, or estates or interests in land, in cases where the land is, or is intended to be, let commercially (see subsection (3)), (c) for the purpose of holding shares in and securities of, or making loans to, one or more companies each of which— (i) is a qualifying company, or (ii) falls within subsection (4), (d) for the purpose of co-ordinating the administration of two or more qualifying companies, (e) for the purpose of the making of investments as mentioned in paragraph (b)— (i) by one or more qualifying companies, or (ii) by a company which has control of the candidate company, or (f) for the purpose of a trade or trades carried on on a commercial basis— (i) by one or more qualifying companies, or (ii) by a company which has control of the candidate company. (3) For the purposes of subsection (2)(b), any letting of land is taken to be commercial unless the land is let to— (a) a person connected with the candidate company (“a connected person”), or (b) a person who is— (i) the spouse or civil partner of a connected person, (ii) a relative of a connected person, or the spouse or civil partner of a relative of a connected person, (iii) a relative of the spouse or civil partner of a connected person, or (iv) the spouse or civil partner of a relative of the spouse or civil partner of the connected person. (4) A company falls within this subsection (see subsection (2)(c)(ii)) if— (a) it is under the control of the candidate company or of a company which has control of the candidate company, and (b) it exists wholly or mainly for the purpose of holding shares in or securities of, or of making loans to, one or more qualifying companies. (5) If a company is wound up and was not a close investment-holding company in the accounting period that ends (by virtue of section 12(2) of CTA 2009) immediately before the winding up starts, the company is not treated for the purposes of this Part as being a close investment-holding company in the subsequent accounting period. (6) In this section “qualifying company” means a company which— (a) is under the control of the candidate company or of a company which has control of the candidate company, and (b) exists wholly or mainly for either or both of the purposes mentioned in subsection (2)(a) or (b). (7) In this section— “control” has the meaning given by section 450, and “relative” means brother, sister, ancestor or lineal descendant.
Propose a change(1) This Part provides corporation tax relief for— (a) losses made in a trade (see Chapter 2 as well as the restrictions on relief in Chapter 3 relating to limited partnerships and limited liability partnerships), (b) losses made in a UK property business or overseas property business (see Chapter 4), (c) losses made on a disposal of certain shares (see Chapter 5), and (d) losses made in certain miscellaneous transactions (see Chapter 6). (2) This Part also provides for the reduction of available relief if there is a write-off of government investment in a company (see Chapter 7). (3) For rules about the calculation of losses for the purposes of this Part, see— (a) section 47 of CTA 2009 (losses of a trade calculated on same basis as profits), and (b) section 210 of CTA 2009 (which applies section 47 of that Act, so that losses of a UK property business or overseas property business are calculated on the same basis as profits). (4) See also Part 17 of CTA 2009 for rules about how to calculate the losses of a company that is a partner in a partnership.
Propose a change(1) This Chapter provides relief for a loss made by a company in a trade (see sections 37 to 47) (2) This Chapter also provides for restrictions on relief for the following cases— (a) farming or market gardening (sections 48 to 51), (b) dealings in commodity futures (section 52), (c) leasing contracts and company reconstructions (section 53), and (d) receipts of interest, dividends and royalties by a non-UK resident company (section 54). (3) In this Chapter references to a company carrying on a trade are references to the company carrying on the trade so as to be within the charge to corporation tax in relation to the trade. (4) In this Chapter, except in so far as the context otherwise requires— (a) references to a trade include an office, and (b) references to carrying on a trade include holding an office.
Propose a change(1) This section applies if, in an accounting period, a company carrying on a trade makes a loss in the trade. (2) The company may make a claim for relief for the loss under this section (but see subsection (5)). (3) If the company makes a claim, the relief is given by deducting the loss from the company's total profits of— (a) the accounting period in which the loss is made (“the loss-making period”), and (b) if the claim so requires, previous accounting periods so far as they fall (wholly or partly) within the period of 12 months ending immediately before the loss-making period begins. (4) The amount of a deduction to be made under subsection (3) for any accounting period is the amount of the loss so far as it cannot be deducted under that subsection for a subsequent accounting period. (5) The company may not make a claim if, in the loss-making period, the company carries on the trade wholly outside the United Kingdom. (6) A deduction under subsection (3)(b) may be made for an accounting period only if the company— (a) carried on the trade in the period, and (b) did not do so wholly outside the United Kingdom. (7) The company's claim must be made— (a) within the period of two years after the end of the loss-making period, or (b) within such further period as an officer of Revenue and Customs may allow. (8) If, for an accounting period, deductions under subsection (3) are to be made for losses of different accounting periods, the deductions are to be made in the order in which the losses were made (starting with the earliest loss). (9) Relief under this section is subject to restriction or modification in accordance with provisions of the Corporation Tax Acts.
Propose a change(1) This section applies if an accounting period falls partly within the period of 12 months mentioned in section 37(3)(b). (2) The amount of the deduction for the loss for the accounting period is not to exceed an amount equal to the overlapping proportion of the company's total profits of that period. (3) The overlapping proportion is the same as the proportion that the part of the accounting period falling within the period of 12 months bears to the whole of the accounting period.
Propose a change(1) This section applies if— (a) a company ceases to carry on a trade, and (b) the company has made a terminal loss in the trade. (2) Sections 37(3)(b) and 38(1) and (3) have effect in relation to the terminal loss as if the references to 12 months were references to 3 years. (3) The following are terminal losses made in the trade— (a) the whole of any loss made by the company in the trade in an accounting period that begins during the final 12 months, and (b) the overlapping proportion of any loss made by the company in the trade in an accounting period that ends, but does not begin, during the final 12 months. (4) The overlapping proportion is the same as the proportion that the part of the accounting period falling within the final 12 months bears to the whole of the accounting period. (5) “The final 12 months” means the period of 12 months ending when the company ceases to carry on the trade. (6) This section is subject to section 41.
Propose a change