Corporation Tax Act 2009

[^key-3570cf50246e00b87d89dd8fc7a119d9]: S. 1138A(1)(b) substituted (with effect in accordance with s. 29(9) of the amending Act) by Finance Act 2025 (c. 8), s. 29(4)(a)(9)

[^key-f7fee011735501831a14bf80ad186626]: Words in s. 1142E(b) omitted (with effect in accordance with s. 29(9) of the amending Act) by virtue of Finance Act 2025 (c. 8), s. 29(5)(9)

[^key-fdcfdaab224d1e71868c258cdf32f03a]: S. 1179AA(7) punctuation mark inserted (20.3.2025) by Finance Act 2025 (c. 8), s. 27(1)(a) (with s. 27(14))

[^key-39637eb64f2b02d1c0629777b197385f]: Words in s. 1179AA(7) renumbered as s. 1179AA(7)(a) (20.3.2025) by Finance Act 2025 (c. 8), s. 27(1)(b) (with s. 27(14))

[^key-6848800ba86e456db01786a4879b03f7]: S. 1179AA(7)(b) inserted (20.3.2025) by Finance Act 2025 (c. 8), s. 27(1)(c) (with s. 27(14))

[^key-fb59d025a8f84083b88bd1f1467b544f]: Words in s. 1179AE(2) substituted (20.3.2025) by Finance Act 2025 (c. 8), s. 85(2)

[^key-2ee8caa7eeaf49c40e21e93620f4783e]: Words in s. 1179DJ(2) substituted for s. 1179DJ(2)(a)(b) (20.3.2025) by virtue of Finance Act 2025 (c. 8), s. 27(3) (with s. 27(14))

[^key-fd5dff5d6a20d8830cd19fec4720f234]: S. 1179DJ(3)(a)(b) substituted (20.3.2025) by virtue of Finance Act 2025 (c. 8), s. 27(4) (with s. 27(14))

[^key-8cd524b3b29999d50b5cc7122e2c74a6]: Words in s. 1179DJ(6) substituted (20.3.2025) by Finance Act 2025 (c. 8), s. 27(5) (with s. 27(14))

[^key-dd2ac314296073da50456da723fea327]: S. 1179DJ(7)(8) substituted (20.3.2025) by Finance Act 2025 (c. 8), s. 27(6) (with s. 27(14)(15))

[^key-0c1486afd417bc4a6913df99fdcb37b9]: Words in s. 1179DJA(9) substituted (20.3.2025) by Finance Act 2025 (c. 8), s. 27(12) (with s. 27(14))

[^key-62b38ab1c0e034d792c11cb31ee9ed5a]: S. 1179DT renumbered as s. 1179DT(1) (20.3.2025) by Finance Act 2025 (c. 8), s. 28(2)(b) (with s. 28(6))

[^key-df45585f0be4f0bcb3f696de2de8e469]: S. 1179DT(2) inserted (20.3.2025) by Finance Act 2025 (c. 8), s. 28(2)(c) (with s. 28(6))

[^key-38cbdb5077235befb5e759eff2cd4e50]: S. 1179DX(3) omitted (20.3.2025) by virtue of Finance Act 2025 (c. 8), s. 28(3) (with s. 28(6))

[^key-9de6070082cea0d334a27721408ef1a0]: Words in s. 1179FC(2) substituted for s. 1179FC(2)(a)(b) (20.3.2025) by virtue of Finance Act 2025 (c. 8), s. 27(8) (with s. 27(14))

[^key-d97efad112f643c74d60f73506d7099d]: S. 1179FC(3)(a)(b) substituted (20.3.2025) by virtue of Finance Act 2025 (c. 8), s. 27(9) (with s. 27(14))

[^key-45fb7e1a9edcf6165b3701d20e7d8ae4]: Words in s. 1179FC(6) substituted (20.3.2025) by Finance Act 2025 (c. 8), s. 27(10) (with s. 27(14))

[^key-6e774c6cedd47b607961d1bad9dc664a]: S. 1179FC(7)(8) substituted (20.3.2025) by Finance Act 2025 (c. 8), s. 27(11) (with s. 27(14)(15))

[^key-f59ee695a905d2420f77c9da5cfed211]: S. 1179FL renumbered as s. 1179FL(1) (20.3.2025) by Finance Act 2025 (c. 8), s. 28(4)(b) (with s. 28(6))

[^key-be5bbab4832dbb0b7baa9ada51857928]: S. 1179FL(2) inserted (20.3.2025) by Finance Act 2025 (c. 8), s. 28(4)(c) (with s. 28(6))

[^key-40843b1171d813bdde577cc555d05f39]: S. 1179FP(3) omitted (20.3.2025) by virtue of Finance Act 2025 (c. 8), s. 28(5) (with s. 28(6))

[^key-37e42aaebdfcff1709522fe2bccf0310]: Sch. 1 para. 172 repealed (for the purposes of corporation tax in relation to accounting periods beginning on or after 1.4.2025) by Finance Act 2025 (c. 8), Sch. 5 paras. 7(a), 12(2) (with Sch. 5 paras. 15, 18(4), 19)

[^key-8f4d4bf112e1d1affc8e312f44ec7620]: Sch. 1 para. 173 repealed (for the purposes of corporation tax in relation to accounting periods beginning on or after 1.4.2025) by Finance Act 2025 (c. 8), Sch. 5 paras. 7(a), 12(2) (with Sch. 5 paras. 15, 18(4), 19)

[^key-7fa1dab4efbb14a7603c943adf27fd3e]: Sch. 1 para. 380 repealed (with effect in accordance with Sch. 5 para. 13 of the amending Act) by Finance Act 2025 (c. 8), Sch. 5 paras. 11(g), 13 (with Sch. 5 paras. 14, 15, 18(4), 19)

[^key-5133a29334a01190affc89a0f70bc4c5]: Sch. 1 para. 477 repealed (for the purposes of corporation tax, in relation to accounting periods beginning on or after 1.4.2025 and, for the purposes of income tax, in relation to periods of account beginning on or after 6.4.2025) by Finance Act 2025 (c. 8), Sch. 5 paras. 9(c), 12(3) (with Sch. 5 paras. 15, 18(4), 19)

[^key-ddbeec2ff1a3d357c4926164e2a33159]: Sch. 1 para. 478 repealed (for the purposes of corporation tax, in relation to accounting periods beginning on or after 1.4.2025 and, for the purposes of income tax, in relation to periods of account beginning on or after 6.4.2025) by Finance Act 2025 (c. 8), Sch. 5 paras. 9(c), 12(3) (with Sch. 5 paras. 15, 18(4), 19)

[^key-1801638cb8eca99411a256182a573ec6]: Word in s. 1217K(4)(a) substituted (1.4.2025 in relation to accounting periods beginning on or after that date) by Finance (No. 2) Act 2024 (c. 12), s. 16(1)(a)(3)

[^key-23550416f345027254b9fedbfa43af53]: Word in s. 1217K(4)(b) substituted (1.4.2025 in relation to accounting periods beginning on or after that date) by Finance (No. 2) Act 2024 (c. 12), s. 16(1)(b)(3)

[^key-9cbcb45130f927a6f913cb7064892301]: Word in s. 1217RG(4) substituted (1.4.2025 in relation to accounting periods beginning on or after that date) by Finance (No. 2) Act 2024 (c. 12), s. 17(1)(3)

[^key-0bad949a7d75913c235aa19e62606a3f]: Word in s. 1218ZCH(4)(a) substituted (1.4.2025 in relation to accounting periods beginning on or after that date) by Finance (No. 2) Act 2024 (c. 12), s. 18(2)(a)(4)

[^key-18758869d99ab5cca6d6a80cb126c7e6]: Word in s. 1218ZCH(4)(b) substituted (1.4.2025 in relation to accounting periods beginning on or after that date) by Finance (No. 2) Act 2024 (c. 12), s. 18(2)(b)(4)

Total opening negative amount: “matching”

Overview of Part

Miscellaneous rules about amounts to be brought into account because of this Chapter

Chapter 6A — Shares accounted for as liabilities

521A

• (1) This Chapter contains rules for Part 5 (and the other provisions of the Corporation Tax Acts) to apply in some cases as if at some times in the accounting period of a company (“A”) which holds shares of a certain kind in another company (“B”) the shares were rights under a creditor relationship of A.

• (2) See, in particular—

• (a) section 521B (application of Part 5 to some shares as rights under creditor relationship), and

• (b) section 521C (which describes the shares to which the rules apply).

• (3) In this Chapter references to the investing company are to A and references to the issuing company are to B.

• (4) For the purposes of this Chapter, the definition of “share” in section 476(1) only applies so far as it provides that “ share ” does not include a share in a building society.

• (5) Section 550(3) (repos: ignoring effect on borrower of sale of securities) does not apply for the purposes of this Chapter.

• (6) See section 116B of TCGA 1992 for the effect for chargeable gains purposes of shares beginning or ceasing to be shares to which section 521C applies.

Application of Part 5 to certain shares as rights under creditor relationship

521B

• (1) This section applies in relation to the times in a company's accounting period when—

• (a) the company holds a share in another company, and

• (b) section 521C (shares accounted for as liabilities) applies to the share.

• (2) Part 5 (and the other provisions of the Corporation Tax Acts) apply as if at those times—

• (a) the share were rights under a creditor relationship of the investing company, and

• (b) any distribution in respect of the share were not a distribution (and accordingly is within Part 5).

• (3) Where Part 5 applies in relation to the investing company in accordance with subsection (2) it so applies as if the issuing company stood in the position of debtor as respects the debt in question.

• (4) No debits are to be brought into account by the investing company as respects the share but this does not affect debits to be brought into account in respect of exchange gains or losses.

• (5) Subsection (2)(b) does not affect the operation of Part 1 of Schedule 25 of ICTA (controlled foreign companies: acceptable distribution policy) (including as it continues to have effect in accordance with paragraph 8(1) of Schedule 16 to FA 2009).

• (6) In this Chapter references to “the share” are to the share mentioned in subsection (1).

Shares accounted for as liabilities

521C

• (1) This section applies to the share if—

• (a) the share would be accounted for by the issuing company as a liability in accordance with generally accepted accounting practice,

• (b) the share produces for the investing company a return in relation to any amount which is economically equivalent to interest,

• (c) the issuing company and the investing company are not connected companies,

• (d) the condition in subsection (4) is met,

• (e) the share is not an excepted share (see section 521D), and

• (f) the investing company holds the share for an unallowable purpose (see section 521E).

• (2) For the purposes of this section a return produced for a company by an arrangement in relation to any amount is “economically equivalent to interest” if (and only if)—

• (a) it is reasonable to assume that it is a return by reference to the time value of that amount of money,

• (b) it is at a rate reasonably comparable to what is (in all the circumstances) a commercial rate of interest, and

• (c) at the relevant time there is no practical likelihood that it will cease to be produced in accordance with the arrangement unless the person by whom it falls to be produced is prevented (by reason of insolvency or otherwise) from producing it.

• (3) In subsection (2)(c) “ the relevant time ” means the time when the investing company first holds the share or, if later, when the share begins to produce a return for the investing company.

• (4) The condition mentioned in subsection (1)(d) is that the share does not fall to be treated for the accounting period in question as if it were rights under a creditor relationship of the investing company because of section 490 (holdings in OEICs, unit trusts and offshore funds treated as creditor relationship rights).

• (5) Section 466 (companies connected for an accounting period) applies for the purposes of this section.

Excepted shares

521D

• (1) A share is an excepted share for the purposes of section 521C if it is—

• (a) a qualifying publicly-issued share (see subsection (2)), or

• (b) a share which mirrors a public issue (see subsections (3) and (4)).

• (2) A share is a “qualifying publicly-issued share” if—

• (a) it was issued by a company as part of an issue of shares to persons not connected with the company, and

• (b) less than 10% of the shares in that issue are held by the investing company or persons connected with it.

• (3) The first case where shares (“the mirroring shares”) mirror a public issue is where—

• (a) a company (“company A”) issues shares (“the public issue”) to persons not connected with the company,

• (b) within 7 days of that issue, one or more other companies (“companies BB”) issue the mirroring shares to company A on the same terms as the public issue or substantially the same terms,

• (c) company A and companies BB are associated companies (see subsection (5)), and

• (d) the total nominal value of the mirroring shares does not exceed the nominal value of the public issue.

• (4) The second case where shares (“the second level mirroring shares”) mirror a public issue is where, in the circumstances of the first case—

• (a) within 7 days of the public issue, one or more other companies (“companies CC”) issue the second level mirroring shares to one or more of companies BB on the same terms as the public issue or substantially the same terms,

• (b) company A, companies BB and companies CC are associated companies (see subsection (5)), and

• (c) the total nominal value of the second-level mirroring shares does not exceed the nominal value of the public issue.

• (5) For the purposes of subsections (3) and (4) companies are associated companies if they are members of the same group of companies for the purposes of Part 5 of CTA 2010 (group relief) (see section 152 of that Act).

Unallowable purpose

521E

• (1) For the purposes of section 521C, the investing company holds the share for an unallowable purpose if the main purpose, or one of the main purposes for which the company holds the share is to obtain a relevant tax advantage.

• (2) But the investing company may elect that this Chapter is to apply in relation to the share even though it would otherwise be prevented from applying by subsection (1)(f) of that section.

• (3) An election under subsection (2)—

• (a) must be made no later than the time when the investing company first holds the share or, if later, when the share begins to produce a return for the investing company, and

• (b) is irrevocable.

• (4) In this section “ obtain a relevant tax advantage ” means secure that the return produced by the share (or any part of it) is received in a way that means that its treatment for corporation tax purpose is more advantageous to the investing company than it would be if it were—

• (a) charged to corporation tax as income of the investing company, or

• (b) brought into account as income of the investing company for corporation tax purposes,

at the time when amounts would be brought into account in relation to the return in accordance with section 521B.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Connected persons: application of section 56

521F

• (1) This section applies if at any time section 521B begins or ceases to apply in the case of a share held by the investing company.

• (2) The investing company is treated for the purposes of Part 5—

• (a) as having disposed of the share immediately before that time for consideration of an amount equal to the notional carrying value of the share at that time, and

• (b) as having immediately reacquired it for consideration of the same amount.

• (3) In subsection (2) “ notional carrying value ”, in relation to the share, means the amount which would have been its tax-adjusted carrying value based on the accounts of the investing company if a period of account had ended immediately before section 521B began or ceased to apply in the case of the share and the investing company.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Patent royalties

Meaning of “relevant period” in sections 267 and 268

Dividends etc granted by industrial and provident societies

Insurers in financial difficulties: write-down orders

Interpretation of section 375

Interpretation of section 375

Amounts deducted by way of tax adjustment

Loans by trustees of occupational pension schemes

Credit unions

Exceptions to section 409

Surrender of credit to other group companies

Persons indirectly standing in the position of creditor

Interpretation of section 409

Incidental costs of issuing qualifying shares

Insurers in financial difficulties: write-down orders

Late interest treated as not accruing until paid in some cases

Meaning of “option”

Unremittable income: introduction

Loans by trustees of occupational pension schemes

Exceptions to section 409

Meaning of “option”

Interpretation of section 409

Assumptions where options etc apply

Section 418: supplementary

Transitional provisions and savings

Overview of the Corporation Tax Acts

Short-term hiring in and long-term hiring out

58A

• (1) Section 56 does not apply to expenses incurred by a company (“the taxpayer”) on the hiring of a car if condition A or B is met.

• (2) Condition A is that—

• (a) the expenses are incurred in respect of the making available of the car to the taxpayer for a period (“the hire period”) of not more than 45 consecutive days, and

• (b) if the car is made available to the taxpayer (whether by the same person or different persons) for one or more periods linked to the hire period, the hire period and the linked period or periods, taken together, consist of not more than 45 days.

• (3) Condition B is that the expenses are incurred in respect of a period (“the sub-hire period”) throughout which the taxpayer makes the car available to another person (“ the customer ”) and—

• (a) the sub-hire period consists of more than 45 consecutive days, or

• (b) if the taxpayer makes the car available to the customer throughout one or more periods linked to the sub-hire period, the sub-hire period and the linked period or periods, taken together, consist of more than 45 days,

but see subsection (4).

• (4) Condition B is not met if—

• (a) the customer is an employee or officer of the taxpayer or of a person connected with the taxpayer, or

• (b) during all or part of the sub-hire period (or any period linked to the sub-hire period), the customer makes any car available to an employee or officer of the taxpayer under arrangements with the taxpayer or with a person connected with the taxpayer.

• (5) Neither condition A nor condition B is met if the car is hired under arrangements the purpose, or one of the main purposes, of which is—

• (a) to disapply or reduce the effect of section 56, or

• (b) other avoidance of tax.

• (6) For the purposes of condition B the expenses incurred by the taxpayer on the hiring of the car must be apportioned between—

• (a) the sub-hire period, and

• (b) the remainder of the period during which the car is made available to the taxpayer,

according to the respective lengths of those periods.

• (7) A period of consecutive days (“the main period”) is linked to—

• (a) a period of consecutive days that ends not more than 14 days before the main period begins,

• (b) a period of consecutive days that begins not more than 14 days after the main period ends, and

• (c) a period of consecutive days linked to a period in paragraph (a) or (b).

• (8) For the purposes of this section, where arrangements for the hiring of a car include arrangements for the provision of a replacement car in the event that the first car is not available, the first car and any replacement car are to be treated as if they were the same car.

• (9) In this section (and section 58B) “ arrangements ” includes any arrangements, scheme or understanding of any kind, whether or not legally enforceable and whether involving a single transaction or two or more transactions.

Hiring cars (but not motor cycles) with low CO2 emissions before 1 April 2013

58B

• (1) This section applies where connected persons incur expenses on the hiring of the same car for the same period and—

• (a) section 56 would (but for this section) apply to the expenses of two or more of those persons, or

• (b) section 56 and section 48 of ITTOIA 2005 would (but for this section and section 50B of that Act) each apply to the expenses of at least one of those persons.

• (2) This section only applies where one or more of the persons mentioned in subsection (1)(a) or (b) incurs the expenses under commercial arrangements (and such a person is referred to below as a “commercial lessee”).

• (3) In relation to the expenses mentioned in subsection (1) to which section 56 would (but for this section) apply, section 56 only applies to the following—

• (a) where there is one commercial lessee, any such expenses incurred by that lessee, and

• (b) where there is more than one, any such expenses incurred by the first commercial lessee in the chain of arrangements for the hiring of the car for the period.

• (4) In this section—

• (a) references to expenses incurred by a commercial lessee include expenses incurred in that or any other capacity, and

• (b) “ commercial arrangements ” means arrangements the terms of which are such as would reasonably have been expected if the parties to the arrangements had been dealing at arm's length.

Connected persons: application of section 56

Insurers

Dividends etc granted by industrial and provident societies

328A

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328B

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328C

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328D

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328E

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328F

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Meaning of “relevant contingent contract” and “operative condition”

328G

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Other interpretative provisions

328H

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Excluded shares

Consideration to be treated as loan relationship

Late interest treated as not accruing until paid in some cases

Loans by trustees of occupational pension schemes

Shares accounted for as liabilities

Shares accounted for as liabilities

Assumptions where options etc apply

Shares accounted for as liabilities

Application of Part 5 to certain shares as rights under creditor relationship

Disincorporation relief: transfer values for post-FA 2002 goodwill

418A

• (1) This section applies where the debtor or the creditor, in accordance with generally accepted accounting practice, treats the rights and liabilities under the loan relationship as divided between—

• (a) rights and liabilities under a loan relationship (“the host contract”), and

• (b) rights and liabilities under one or more derivative financial instruments or equity instruments.

• (2) Where the debtor, in accordance with generally accepted accounting practice, treats the rights and liabilities under the loan relationship as so divided, section 418 has effect as if the reference to the loan relationship in subsection (3)(a) were to the host contract.

• (3) Where the creditor, in accordance with generally accepted accounting practice, treats the rights and liabilities under the loan relationship as so divided, section 418 has effect as if the reference to the loan relationship in subsection (3)(b) were to the host contract.

• (4) In this section “ the debtor ” and “ the creditor ” have the same meaning as in section 418.

Assumptions where options etc apply

Relevant non-lending relationships: introduction

Overview of Chapter

Supplementary provision about when two persons are related

Chapter 2A — Disguised interest

486A

• (1) This Chapter provides for Part 5 to apply in relation to returns which are economically equivalent to interest (see section 486B).

• (2) For exclusions from this Chapter, see—

• (a) section 486C (return otherwise taxable),

• (b) section 486D (arrangement having no tax avoidance purpose), and

• (c) section 486E (excluded shares).

486B

• (1) Where a company is party to an arrangement which produces for the company a return in relation to any amount which is economically equivalent to interest, Part 5 applies as if the return were a profit arising to the company from a loan relationship.

• (2) For the purposes of this Chapter a return produced for a company by an arrangement in relation to any amount is “economically equivalent to interest” if (and only if)—

• (a) it is reasonable to assume that it is a return by reference to the time value of that amount of money,

• (b) it is at a rate reasonably comparable to what is (in all the circumstances) a commercial rate of interest, and

• (c) at the relevant time there is no practical likelihood that it will cease to be produced in accordance with the arrangement unless the person by whom it falls to be produced is prevented (by reason of insolvency or otherwise) from producing it.

• (3) In subsection (2)(c) “ the relevant time ” means the time when the company becomes party to the arrangement or, if later, when the arrangement begins to produce a return for the company.

• (4) The credits and debits to be brought into account for the purposes of Part 5 in respect of the return must be determined on an amortised cost basis of accounting.

• (5) But if any of the return is not recognised in determining the company's profit or loss for any period it is to be treated as recognised using an amortised cost basis of accounting.

• (6) Where two or more persons are party to an arrangement which produces a return such as is mentioned in subsection (1)—

• (a) for the persons (when taken together), but

• (b) not for either (or any) of them individually,

this section applies as if there were a profit arising to such (if any) of them as are companies from a loan relationship of so much of the return as is just and reasonable.

• (7) The only amounts which may be brought into account for corporation tax purposes in relation to a return such as is mentioned in subsection (1) in the case of any company are those which are brought into account in accordance with this section (but see section 486C).

• (8) In subsection (4) “credits” and “debits” include exchange gains and losses arising as a result of translating at different times the carrying value of the return or the amount by reference to which the return falls to be produced.

• (9) In this Chapter “ arrangement ” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), other than one which constitutes a finance lease (within the meaning given by section 219 of CAA 2001).

Limit on State aid

486C

• (1) This Chapter does not apply to an arrangement which produces a return for a company if or to the extent that the return—

• (a) is charged to corporation tax as income of the company or brought into account as income of the company for corporation tax purposes no later than the time when amounts are brought into account in relation to the return in accordance with section 486B,

• (b) arises from anything that would produce credits or debits in relation to the company under Part 7 (derivative contracts) or Part 8 (intangible fixed assets) but for any exception relating to particular credits or debits, or

• (c) arises from anything that would produce credits or debits in relation to the company under Part 5 apart from this Chapter but for any exception relating to particular credits or debits.

• (2) Subsection (1)(b) does not disapply this Chapter in the case of a return in relation to which section 641 (derivative contracts taxed on chargeable gains basis) applies.

486D

• (1) This Chapter does not apply in relation to a return produced by an arrangement to which a company is a party unless it is reasonable to assume that the main purpose, or one of the main purposes, of the company being a party to the arrangement is to obtain a relevant tax advantage.

• (2) But a company for which a return is produced by an arrangement to which this Chapter would otherwise be prevented from applying by subsection (1) may elect that this Chapter is to apply in relation to the return.

• (3) An election under subsection (2)—

• (a) may not be made by a company if section 486B applies to the company in relation to the return in accordance with subsection (6) of that section,

• (b) must be made no later than the time when the arrangement begins to produce a return for the company, and

• (c) is irrevocable.

• (4) In this section “ obtain a relevant tax advantage ” means secure that the return (or any part of it) is produced in a way which means that its treatment for corporation tax purposes is more advantageous to the company than it would be if it were—

• (a) charged to corporation tax as income of the company, or

• (b) brought into account as income of the company for corporation tax purposes,

at the time when amounts would be brought into account in relation to the return in accordance with section 486B.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Overview of Part

486E

• (1) This Chapter does not apply in relation to an accounting period (“ the relevant accounting period ”) of a company (“the holding company”) for which an arrangement produces a return for the company if the arrangement involves only relevant shares held by the company throughout the relevant period.

• (2) In this section “ the relevant period ” means the period—

• (a) beginning with the later of—

• (i) the time when the holding company becomes party to the arrangement, and

• (ii) the time when the arrangement begins to produce a return for the company, and

• (b) ending with the earliest of—

• (i) the end of the relevant accounting period,

• (ii) the time when the holding company ceases to be party to the arrangement, and

• (iii) the time when the arrangement ceases to produce a return for the company.

• (3) For the purposes of this section an arrangement “involves only” relevant shares if (and only if) the return produced reflects only an increase in the fair value of the shares.

• (4) For the purposes of subsection (3)—

• (a) “ fair value ”, in relation to relevant shares held by the holding company, means an amount which the company would obtain from a knowledgeable and willing purchaser of the shares dealing at arm's length, and

• (b) there is an increase in the fair value of shares even if the increase is realised by the payment of a distribution in respect of the shares.

• (5) In this section “ relevant shares ” means shares which, throughout the relevant period, are—

• (a) fully paid-up shares of a relevant company, or

• (b) shares of a company, other than a relevant company, which would be accounted for as a liability by the company in which they are shares in accordance with generally accepted accounting practice and which produce for the holding company a return in relation to any amount which is economically equivalent to interest (as to which see Chapter 6A).

• (6) For the purposes of subsection (5)(a) shares are fully paid-up if there are no actual or contingent obligations—

• (a) to meet unpaid calls on the shares, or

• (b) to make a contribution to the capital of the company in which they are shares that could affect the value of the shares.

• (7) For the purposes of subsection (5) a company is “a relevant company” if—

• (a) it and the holding company are connected companies,

• (b) it is a relevant joint venture company, or

• (c) it is a CFC within the meaning of Part 9A of TIOPA 2010.

• (8) Section 466 (companies connected for an accounting period) applies for the purposes of subsection (7)(a).

• (9) For the purposes of subsection (7)(b) a company (“C”) is a relevant joint venture company if—

• (a) the holding company is one of two persons who, taken together, control C,

• (b) the holding company has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the holding company and the second person fall to be taken as controlling C, and

• (c) the second person has interests, rights and powers representing—

• (i) at least 40%, but

• (ii) no more than 55%,

of the holdings, rights and powers in respect of which the holding company and the second person fall to be taken as controlling C.

• (10) For the purposes of subsection (9)—

• (a) section 371RB of TIOPA 2010 (read with section 371RD of that Act) applies for the purpose of determining if two persons, taken together, control a company, and

• (b) section 371RD of that Act applies for the purpose of determining if the requirements of paragraphs (b) and (c) are met in any case.

• (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (12) Section 550(3) (repos: ignoring effect on borrower of sale of securities) does not apply for the purposes of this section.

Chapter 2B — Transferred income streams

Introduction to Chapter

486F

• (1) This Chapter provides for Part 5 to apply in relation to a company to which an income stream transfer is made (“ the transferee ”).

• (2) An “income stream transfer” is a transfer by a person (“ the transferor ”) to which either of the following provisions applies—

• (a) Chapter 1 of Part 16 of CTA 2010 (transfers of income streams by companies), or

• (b) Chapter 5A of Part 13 of ITA 2007 (transfers of income streams by individuals).

Overview of Chapter

486G

• (1) For the purposes of this Part—

• (a) the consideration for the transfer of the right to relevant receipts is to be treated as a money debt which is owed to the transferee by the person by whom the relevant receipts fall to be paid, and

• (b) the transfer is to be treated as a transaction for the lending of money from which that debt is treated as arising.

• (2) For the meaning of “relevant receipts” see section 752(2) of CTA 2010 or section 809AZA(2) of ITA 2007.

Introduction to Chapter

Application of Part 5 to certain shares as rights under creditor relationship

Shares accounted for as liabilities

Amounts not fully recognised for accounting purposes: introduction

Unallowable purpose

Shares becoming or ceasing to be shares to which section 521B applies

Application of Part 5 to certain shares as rights under creditor relationship

Amounts not fully recognised for accounting purposes: introduction

599A

• (1) Section 599B applies for the purpose of determining the credits and debits which a company is to bring into account for a period for the purposes of this Part in the following case.

• (2) The case is where—

• (a) the company is, or is treated as, a party to a derivative contract in the period, and

• (b) as a result of tax avoidance arrangements to which the company is at any time a party, an amount is (in accordance with generally accepted accounting practice) not fully recognised for the period in respect of the contract.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) For the purposes of this section an amount is not fully recognised for a period in respect of a contract of a company ... if—

• (a) no amount in respect of the contract ... is recognised in determining its profit or loss for the period, or

• (b) an amount is so recognised in respect of only part of the contract ....

• (7) For the purposes of this section arrangements are “tax avoidance arrangements” if the main purpose, or one of the main purposes, of any party to the arrangements, in entering into them, is to obtain a tax advantage.

• (8) In subsection (7)—

• (a) “arrangements” includes any arrangements, scheme or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions, and

• (b) “tax advantage” has the meaning given by section 1139 of CTA 2010.

• (9) For the purposes of this section a company is to be treated as a party to a derivative contract even though it has disposed of its rights and liabilities under the contract to another person—

• (a) under a repo or stock lending arrangement, or

• (b) under a transaction which is treated as not involving any disposal as a result of section 26 of TCGA 1992 (mortgages and charges not to be treated as disposals).

599B

• (1) In determining the credits and debits which a company is to bring into account for the period referred to in section 599A(1) for the purposes of this Part in respect of the derivative contract mentioned in section 599A(2), the assumption in subsection (2) is to be made.

• (2) The assumption is that an amount in respect of the whole of the contract in question is recognised in determining the company's profit or loss for the period.

• (2A) But no debits are, as a result of this section, to be brought into account by the company in respect of the derivative contract.

• (3) The credits and debits which are to be brought into account for the purposes of this Part by the company in respect of the contract are to be determined on the basis of fair value accounting.

• (4) If—

• (a) the company is, or is treated as, a party to the contract at the beginning of the period referred to in section 599A(1), and

• (b) the fair value of the contract at that time is greater than the tax-adjusted carrying value of that contract at that time,

a credit of an amount equal to the difference is to be brought into account for that period for the purposes of this Part in respect of the contract.

606A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “test day”

606B

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

606C

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

606D

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “option”

606E

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

606F

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “relevant contingent contract” and “operative condition”

606G

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deemed market value acquisition: adjustment where nil accounting value

606H

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

Company ceasing to be party to derivative contract

Credits and debits not to be brought into account under Part 5

Deemed market value acquisition: adjustment where nil accounting value

Part 9A — Company distributions

Chapter 1 — The charge to tax

931A

• (1) The charge to corporation tax on income applies to any dividend or other distribution of a company, but only if the distribution is not exempt.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) A distribution is exempt for the purposes of this Part if it is exempt under—

• (a) Chapter 2 (distributions received by small companies), or

• (b) Chapter 3 (distributions received by companies that are not small).

Chapter 2 — Exemption of distributions received by small companies

931B

A dividend or other distribution of a company that is received in an accounting period of the recipient in which the recipient is a small company is exempt if—

• (a) the payer is a resident of (and only of) the United Kingdom or a qualifying territory at the time that the distribution is received,

• (b) the distribution is not of a kind mentioned in paragraph E or F in section 1000(1) of CTA 2010 (certain non-dividend distributions),

• (c) no deduction is allowed to a resident of any territory outside the United Kingdom under the law of that territory in respect of the distribution, and

• (d) the distribution is not made as part of a tax advantage scheme.

931C

• (1) For the purpose of section 931B a territory is a “qualifying territory” if—

• (a) arrangements made in relation to the territory have effect under section 2(1) of TIOPA 2010 (“double taxation relief arrangements”), and

• (b) the arrangements contain a non-discrimination provision.

• (2) The Treasury may by regulations—

• (a) provide that a territory specified in or of a description specified in the regulations that does not satisfy subsection (1)(a) or (b) is a qualifying territory for the purpose of section 931B, and

• (b) provide that a territory so specified or described that satisfies subsection (1)(a) and (b) is not a qualifying territory for that purpose.

• (3) For the purpose of section 931B a company is a resident of a territory if, under the laws of the territory, the company is liable to tax there—

• (a) by reason of its domicile, residence or place of management, but

• (b) not in respect only of income from sources in that territory or capital situated there.

• (4) In subsection (1) “non-discrimination provision”, in relation to double taxation relief arrangements, means a provision to the effect that nationals of a state which is a party to those arrangements (a “contracting state”) are not to be subject in any other contracting state to—

• (a) any taxation, or

• (b) any requirement connected with taxation,

which is other or more burdensome than the taxation and connected requirements to which nationals of that other state in the same circumstances (in particular with respect to residence) are or may be subjected.

• (5) In subsection (4) “national”, in relation to a contracting state, includes—

• (a) an individual possessing the nationality or citizenship of the contracting state, and

• (b) a legal person, partnership or association deriving its status as such from the laws in force in that contracting state.

• (6) Regulations under this section may—

• (a) describe a territory by reference to the double taxation relief arrangements for the time being in force in relation to the territory,

• (b) make different provision in relation to different descriptions of company, and

• (c) make provision having effect in relation to accounting periods current on the day on which the regulations are made.

Chapter 3 — Exemption of distributions received by companies that are not small

931D

A dividend or other distribution of a company that is received in an accounting period of the recipient in which the recipient is not a small company is exempt if—

• (a) the distribution falls into an exempt class (see sections 931E to 931Q),

• (b) the distribution is not of a kind mentioned in paragraph E or F in section 1000(1) of CTA 2010 (certain non-dividend distributions), and

• (c) no deduction is allowed to a resident of any territory outside the United Kingdom under the law of that territory in respect of the distribution.

Exempt classes

931E

• (1) A dividend or other distribution falls into an exempt class if condition A or B is met.

• (2) Condition A is that the recipient controls the payer.

• (3) Condition B is that—

• (a) the recipient is one of two persons who, taken together, control the payer,

• (b) the recipient has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the recipient and the second person fall to be taken as controlling the payer, and

• (c) the second person has interests, rights and powers representing—

• (i) at least 40%, but

• (ii) no more than 55%,

of the holdings, rights and powers in respect of which the recipient and the second person fall to be taken as controlling the payer.

• (4) Section 371RB of TIOPA 2010 (read with section 371RD of that Act) applies for the purposes of this section.

• (5) Section 371RD of TIOPA 2010 applies for the purpose of determining if the requirements of subsection (3)(b) and (c) are met in any case.

• (6) In subsections (4) and (5) references to section 371RD of TIOPA 2010 are to that section omitting subsection (3)(c) and (d).

931F

A dividend or other distribution falls into an exempt class if it is made in respect of a share that—

• (a) is an ordinary share, and

• (b) is not redeemable.

931G

• (1) A dividend or other distribution falls into an exempt class if the recipient—

• (a) holds less than 10% of the issued share capital of the payer,

• (b) is entitled to less than 10% of the profits available for distribution to holders of the issued share capital of the payer, and

• (c) would be entitled on a winding up to less than 10% of the assets of the company available for distribution to holders of the issued share capital of the payer.

• (2) Where the payer has more than one class of share, references in subsection (1) to the issued share capital of the payer are to issued share capital of the same class as the share in respect of which the distribution is made.

• (3) For the purposes of this section shares are not of the same class if the amounts paid up on them (otherwise than by way of premium) are different.

931H

• (1) A dividend or other distribution falls into an exempt class if it is made in respect of relevant profits.

• (2) In this section “relevant profits” means any profits available for distribution at the time that the distribution is made, other than profits that reflect the results of a transaction, or of one or more of a series of transactions, where—

• (a) the transaction or series of transactions achieve a reduction (other than a negligible reduction) in United Kingdom tax, and

• (b) the purpose or one of the main purposes of that transaction or series of transactions is to achieve that reduction.

• (3) A distribution that falls into an exempt class otherwise than by virtue of this section is for the purposes of this section treated, so far as possible, as made in respect of relevant profits.

• (4) Any other distribution is for the purposes of this section treated, so far as possible, as made in respect of profits other than relevant profits.

• (5) Where by virtue of subsection (4) part of a distribution is treated as made in respect of relevant profits and part is treated as made in respect of profits other than relevant profits, the two parts are treated for the purposes of this Part and Part 2 of TIOPA 2010 (double taxation relief) as separate distributions.

931I

A dividend falls into an exempt class if the dividend is paid in respect of a share to which, at the time of the payment, section 521C (shares accounted for as liabilities treated as loan relationships) does not apply only because the condition in subsection (1)(f) of that section is not met.

Exempt classes: anti-avoidance

931J

• (1) This section applies to a dividend that would, apart from this section, fall into an exempt class by virtue of section 931E.

• (2) The dividend does not fall into an exempt class by virtue of that section if—

• (a) the dividend is paid as part of a scheme the main purpose, or one of the main purposes, of which is to secure that dividends of the payer received by the recipient fall into an exempt class by virtue of that section, and

• (b) the following condition is met.

• (3) The condition is that the dividend is paid in respect of pre-control profits.

• (4) A dividend that falls into an exempt class otherwise than by virtue of section 931E is for the purposes of this section treated, so far as possible, as paid in respect of profits other than pre-control profits.

• (5) Any other dividend is for the purposes of this section treated, so far as possible, as paid in respect of pre-control profits.

• (6) In this section “pre-control profits” means any profits available for distribution at the time the dividend is paid that arose at a time when neither condition A nor condition B in section 931E was met.

• (7) Where—

• (a) the condition in subsection (2)(a) is met, and

• (b) by virtue of subsection (5) part of a dividend is treated as paid in respect of pre-control profits and part is treated as paid in respect of profits other than pre-control profits,

the two parts are treated for the purposes of this Part and Part 2 of TIOPA 2010 (double taxation relief) as separate dividends.

931K

• (1) This section applies to a dividend or other distribution that would, apart from this section, fall into an exempt class by virtue of section 931F.

• (2) The distribution does not fall into an exempt class by virtue of that section if—

• (a) the distribution is made as part of a scheme the main purpose, or one of the main purposes, of which is to secure that distributions of the payer received by the recipient fall into an exempt class by virtue of that section, and

• (b) the following condition is met.

• (3) The condition is that the distribution is made in respect of a share that—

• (a) would not be an ordinary share, or

• (b) would be redeemable,

were the rights under the scheme of each relevant person to be attached to the share.

931L

• (1) This section applies to a dividend or other distribution that would, apart from this section, fall into an exempt class by virtue of section 931G.

• (2) The distribution does not fall into an exempt class by virtue of that section if—

• (a) the distribution is made as part of a scheme the main purpose, or one of the main purposes, of which is to secure that distributions of the payer received by the recipient fall into an exempt class by virtue of that section, and

• (b) the following condition is met.

• (3) The condition is that the distribution would not fall into an exempt class by virtue of section 931G if the reference in subsection (1) of that section to the recipient were to all relevant persons taken together.

931M

• (1) This section applies to a dividend or other distribution that does not fall into an exempt class by virtue of section 931E but would, apart from this section, fall into an exempt class otherwise than by virtue of that section.

• (2) The distribution does not fall into an exempt class if—

• (a) the distribution is made as part of a tax advantage scheme, and

• (b) conditions A to C are met.

• (3) Condition A is that the distribution constitutes part of a return in relation to an amount that is produced by the scheme for a relevant person, or two or more relevant persons taken together.

• (4) Condition B is that the return is economically equivalent to interest.

• (5) For this purpose a return produced for a person or persons by a scheme in relation to an amount is “economically equivalent to interest” if (and only if)—

• (a) it is reasonable to assume that it is a return by reference to the time value of that amount of money,

• (b) it is at a rate reasonably comparable to a commercial rate of interest, and

• (c) at the time the scheme is entered into by the person or any of the persons, there is no practical likelihood that it will cease to be produced in accordance with the scheme.

• (6) Condition C is that there is a connection between the payer and the recipient for the accounting period of the payer in which the distribution is made.

• (7) Section 466 (companies connected for an accounting period) applies for the purposes of subsection (6) as if that subsection were a provision of Part 5 to which that section is applied (but this does not affect the application of section 1316(1) (meaning of connected persons) for the purposes of any other provision of this Part).

931N

• (1) This section applies to a dividend or other distribution that would, apart from this section, fall into an exempt class.

• (2) The distribution does not fall into an exempt class if—

• (a) the distribution is made as part of a tax advantage scheme, and

• (b) the following condition is met.

• (3) The condition is that a deduction is allowed to a resident of any territory outside the United Kingdom under the law of that territory in respect of an amount determined by reference to the distribution.

931O

• (1) This section applies to a dividend or other distribution that would, apart from this section, fall into an exempt class.

• (2) The distribution does not fall into an exempt class if—

• (a) the distribution is made as part of a tax advantage scheme, and

• (b) the following condition is met.

• (3) The condition is that the scheme includes a payment, or the giving up of a right to income, by a relevant person where—

• (a) the payment is made, or the right to income is given up, under a liability incurred for consideration in money or money's worth all or any of which consists of, or of the right to receive, the distribution, and

• (b) in the case of a payment, the conditions in subsections (2) and (4) to (7) of section 1301 (restriction of deductions for annual payments) apply to the payment.

931P

• (1) This section applies to a dividend or other distribution that would, apart from this section, fall into an exempt class.

• (2) The distribution does not fall into an exempt class if—

• (a) the distribution is made as part of a tax advantage scheme, and

• (b) the following condition is met.

• (3) The condition is that—

• (a) the scheme includes a payment or receipt, or the giving up of a right to income, by a relevant person in respect of goods or services, and

• (b) the amount of the payment or receipt, or the amount of income given up, differs from the amount the relevant person would have paid, received or given up in respect of those goods or services had the distribution not been made.

• (4) This section does not apply to a scheme that consists of a transaction or series of transactions in relation to which Part 4 of TIOPA 2010 (provision not at arms length between parties under common control) applies.

931Q

• (1) This section applies to a dividend or other distribution that would, apart from this section, fall into an exempt class.

• (2) The distribution does not fall into an exempt class if—

• (a) the distribution is made as part of a scheme entered into by the recipient and another relevant person (“C”),

• (b) if C had received the distribution, it would be reasonable to assume that the distribution would be dealt with under Part 3 (trading income), and

• (c) the main purpose, or one of the main purposes, of the scheme is to produce the result that the distribution is dealt with under this Part because it is received by the recipient.

• (3) For the purposes of subsection (2)(b) it is to be assumed that, in the case of any relevant transaction to which a relevant person other than C is a party, C were that party to that transaction.

• (4) In this section “relevant transaction” means any of the transactions giving rise to the distribution.

Chapter 4 — Supplementary

Election that distribution should not be exempt

931R

• (1) This section applies where, apart from this section, a distribution (“the distribution”) would be exempt.

• (2) If the recipient so elects, the distribution is not exempt.

• (3) An election under this section must be made on or before the second anniversary of the end of the accounting period in which the distribution is received.

• (4) Subsection (5) applies where the distribution is a dividend that is treated for certain purposes of Part 18 of ICTA (double taxation relief) as two separate dividends by virtue of section 801C of that Act (separate streaming of dividend so far as representing an ADP dividend of a CFC).

• (5) If the recipient so elects—

• (a) the distribution is to be treated for the purposes of this Part as if it were an ADP dividend and a separate residual dividend as provided for in that section of that Act, and

• (b) the ADP dividend is not exempt.

• (6) The reference in subsection (4) to section 801C of ICTA is to that section as it continues to have effect in accordance with paragraph 8(1) of Schedule 16 to FA 2009 in relation to dividends paid on or after 1 July 2009 for accounting periods beginning before that day.

Interpretation

931S

• (1) For the purposes of this Part a company is a “small company” in an accounting period if it is in that period a micro or small enterprise, as defined in the Annex to Commission Recommendation 2003/361/EC of 6 May 2003.

• (2) But a company is not a “small company” in an accounting period if it is at any time in that period—

• (a) an open-ended investment company,

• (b) an authorised unit trust scheme,

• (c) an insurance company, or

• (d) a friendly society.

• (3) In subsection (2)—

• “open-ended investment company” has the meaning given by section 236 of FISMA 2000;

• “authorised unit trust scheme” means a unit trust scheme (within the meaning given by section 237 of FISMA 2000) in relation to which a order under section 243 of that Act (authorisation orders) is in force;

• “insurance company” has the meaning given by section 65 of FA 2012;

• “friendly society” has the meaning given by section 172 of FA 2012.

931T

In this Part—

• “the payer”, in relation to a distribution, means the company that makes the distribution;

• “the recipient”, in relation to a distribution, means the company that receives the distribution;

• “a relevant person”, in relation to a distribution, means—the company that receives the distribution, orany person connected with that company.

931U

• (1) In this Part “ordinary share” means a share that does not carry any present or future preferential right to dividends or to a company's assets on its winding up.

• (2) A share is regarded as “redeemable” for the purposes of this Part only if it is redeemable as a result of its terms of issue (or any collateral arrangements)—

• (a) requiring redemption,

• (b) entitling the holder to require redemption, or

• (c) entitling the issuing company to redeem.

931V

• (“) For the purposes of this Part—

• “scheme” includes any scheme, arrangements or understanding of any kind whatever, whether or not legally enforceable, involving a single transaction or two or more transactions;

• “tax advantage scheme” means a scheme the main purpose, or one of the main purposes, of which is to obtain a tax advantage (other than a negligible tax advantage).

• (2) In this section “tax advantage” has the meaning given by section 1139 of CTA 2010.

Boundary provisions

931W

• (1) Any income so far as it falls within—

• (a) this Part, and

• (b) Chapter 2 of Part 3 (income taxed as trade profits),

is dealt with under Part 3.

• (2) Any income so far as it falls within—

• (a) this Part, and

• (b) Chapter 3 of Part 4 (profits of property businesses) so far as the Chapter relates to a UK property business,

is dealt with under Part 4.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Large companies: declaration about effect of relief

“The tax credits”

“Qualifying land remediation expenditure”

1145A

For the purposes of this Part land is in a derelict state if (and only if) the land—

• (a) is not in productive use, and

• (b) cannot be put into productive use without the removal of buildings or other structures.

1145B

• (1) A nuclear site is not land in a contaminated state or land in a derelict state for the purposes of this Part.

• (2) “Nuclear site” means—

• (a) any site in respect of which a nuclear site licence is for the time being in force, or

• (b) any site in respect of which, after the revocation or surrender of a nuclear site licence, the period of responsibility of the licensee has not yet come to an end.

• (3) In subsection (2) “nuclear site licence”, “licensee” and “period of responsibility” have the same meaning as in the Nuclear Installations Act 1965.

1146A

• (1) For the purposes of this Part “relevant derelict land remediation”, in relation to land which is in a derelict state and in which a major interest has been acquired by a company, means—

• (a) activities in relation to which conditions A and B are met, and

• (b) if there are such activities, relevant preparatory activity.

• (2) Condition A is that the activities comprise the doing of any works, the carrying out of any operations or the taking of any steps in relation to the land in question.

• (3) Condition B is that the purpose of the activities is a purpose specified by order made by the Treasury.

• (4) An order under subsection (3) may contain incidental, supplemental, consequential and transitional provision and savings.

• (5) For the purposes of subsection (1)(b) “relevant preparatory activity” has the same meaning as for the purposes of subsection (1)(b) of section 1146 (see subsection (4) of that section, but reading the reference to subsection (1)(a) of that section as a reference to subsection (1)(a) of this section).

1178A

• (1) References in this Part to the acquisition of a major interest in land are to the acquisition of a freehold interest in the land or of a relevant leasehold interest in the land.

• (2) The reference in subsection (1) to the acquisition of a freehold interest in land is—

• (a) in relation to land in England and Wales, to the acquisition of an estate in fee simple absolute (whether subsisting at law or in equity),

• (b) in relation to land in Scotland, to the acquisition of the interest of an owner of land, and

• (c) in relation to land in Northern Ireland, to the acquisition of any freehold estate (whether subsisting at law or in equity).

• (3) The reference in subsection (1) to the acquisition of a relevant leasehold interest in land is to the acquisition by grant or assignment (or assignation) of—

• (a) in relation to land in England and Wales, a term of years absolute (whether subsisting at law or in equity),

• (b) in relation to land in Scotland, the tenant's right over or interest in a property subject to a lease, or

• (c) in relation to land in Northern Ireland, any leasehold estate (whether subsisting at law or in equity),

in relation to which the condition in subsection (4) is met.

• (4) That condition is that—

• (a) in the case of a grant, the term of years or period of the lease is at least 7 years, and

• (b) in the case of an assignment (or assignation) the unexpired portion of the term or period is at least 7 years.

Certification as a British film

Contributions to local enterprise organisations or urban regeneration companies: disqualifying benefits

Interest from tax reserve certificates

Abbreviated references to Acts

Power to undo changes

Repeals and revocations

A1

• (1) The main Acts relating to corporation tax are—

• (a) this Act (which covers the ground described in section 1),

• (b) CTA 2010 (which covers the ground described in section 1 of that Act), and

• (c) TCGA 1992 (so far as relating to chargeable gains accruing to a company in respect of which the company is chargeable to corporation tax).

• (2) Enactments relating to corporation tax are also contained in other Acts: see in particular—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) Schedule 18 to FA 1998 (company tax returns, assessments and related matters),

• (d) Schedule 22 to FA 2000 (tonnage tax),

• (e) CAA 2001 (allowances for capital expenditure),

• (f) Part 2 of TIOPA 2010 (double taxation relief),

• (g) Parts 4 and 5 of that Act (transfer pricing and advance pricing agreements),

• (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (ha) Part 6A of that Act (hybrid and other mismatches),

• (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (j) Part 8 of that Act (offshore funds),

• (ja) Part 9A of that Act (controlled foreign companies),

• (jb) Part 10 of that Act (corporate interest restriction),

• (k) Part 2 of FA 2012 (insurance companies carrying on long-term business), and

• (l) Part 3 of that Act (friendly societies carrying on long-term business).

• (3) Schedule 1 to the Interpretation Act 1978 defines “the Corporation Tax Acts” as the enactments relating to the taxation of the income and chargeable gains of companies and of company distributions (including provisions relating to income tax).

Short-term hiring in and long-term hiring out

Connected persons: application of section 56

Expenditure on integral features

Dividends etc granted by industrial and provident societies

221A

• (1) This section applies if a grant of a lease constitutes a disposal of an asset for the purposes of section 758(2)(b) or 763(2)(a) of CTA 2010 (disposals under finance arrangements).

• (2) Sections 217 to 221 do not apply in relation to a premium paid in respect of the grant.

Miscellaneous rules about amounts to be brought into account because of this Chapter

Other interpretative provisions

Debits in respect of pre-trading expenditure

Debits in respect of pre-trading expenditure

Loans to close companies by participators etc

Interpretation of section 375

Party to loan relationship having major interest in other party

Party to loan relationship having major interest in other party

Overview of Chapter

Overview of Chapter

Overview of Chapter

Persons indirectly standing in the position of creditor

Unallowable purpose

Application of Part 5 to certain shares as rights under creditor relationship

Relevant non-lending relationships: introduction

Credits and debits not to be brought into account under Part 5

Exchange gains and losses: amounts treated as money debts

Exclusion where arrangement has no tax avoidance purpose

“Externally provided worker”

Interest from tax reserve certificates

Amounts not fully recognised for accounting purposes: introduction

Introduction to Chapter

Application of Part 5 to certain shares as rights under creditor relationship

Application of Part 5 to certain shares as rights under creditor relationship

Application of Part 5 to certain shares as rights under creditor relationship

Unallowable purpose

Shares becoming or ceasing to be shares to which section 521B applies

Application of Part 5 to certain shares as rights under creditor relationship

Amounts not fully recognised for accounting purposes: introduction

Meaning of “test day”

Meaning of “option”

Meaning of “relevant contingent contract” and “operative condition”

Certification as a British film

Company ceasing to be party to derivative contract

Overview of Part

Repeals and revocations

Deemed market value acquisition: adjustment where nil accounting value

Dividends in respect of shares accounted for as liabilities

Withdrawal of deduction under section 989

Meaning of “unallowable purpose”

Industrial development grants

1301A

In calculating a company's income from any source for corporation tax purposes, no deduction is allowed for interest otherwise than under Part 5 (loan relationships).

1301B

In calculating a company's income from any source for corporation tax purposes, no deduction is allowed in respect of qualifying charitable donations.

Condition relating to employee's income tax position

Abbreviated references to Acts

Power to undo changes

60A

• (1) Where plant or machinery (“the asset”) is leased and a rental rebate is payable by the lessor, the amount of the deduction allowable in respect of the rebate is limited to—

• (a) the amount of the lessor's income from the lease, or

• (b) in the case of a finance lease, that amount excluding the finance charge.

• (2) “Rental rebate” means any sum payable to the lessee that is calculated by reference to the termination value of the asset.

• (3) For this purpose—

• (a) the termination value of an asset is the value of the asset at or about the time when the lease terminates,

• (b) calculation by reference to the termination value includes calculation by reference to any one or more of—

• (i) the proceeds of sale, if the asset is sold,

• (ii) any insurance proceeds, compensation or similar sums in respect of the asset, and

• (iii) an estimate of the market value of the asset, and

• (c) calculation by reference to the termination value also includes—

• (i) determination in a way which, or by reference to factors or criteria which, might reasonably be expected to produce a broadly similar result to calculation by reference to the termination value, or

• (ii) any other form of calculation indirectly by reference to the termination value.

• (4) For the purposes of this section—

• (a) the income of the lessor from the lease is the total of all the amounts receivable in connection with the lease that have been brought into account in calculating the lessor's income for corporation tax purposes, excluding—

• (i) disposal receipts brought into account under Part 2 of CAA 2001 (see section 60(1) of that Act), and

• (ii) so much of any amount as represents charges for services or qualifying UK or foreign tax (within the meaning of section 70YE of that Act) to be paid by the lessor, and

• (b) the finance charge, in relation to a finance lease, is—

• (i) if the lease is one that, under generally accepted accounting practice, falls (or would fall) to be treated as a loan, so much of the rentals under the lease as fall (or would fall) to be treated as interest, or

• (ii) in any other case, the amount that, in accordance with generally accepted accounting practice, falls (or would fall) to be treated as the gross return on investment.

• (5) Where the asset is acquired by the lessor in a transaction—

• (a) to which section 948 of CTA 2010 applies (modified application of CAA 2001 in case of transfer of trade without change of ownership), or