Legalize / United Kingdom / Public General Act

Corporation Tax Act 2009

Type Public General Act

Publication 2009-03-26

Last updated 2025-04-01

State In force

Department Statute Law Database

Source legislation.gov.uk

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(a) if it is a payment to a person (“C”) in exchange for something supplied, transferred or done by that person,

(b) if the company is connected with C, and

(c) if, and to the extent that, the amount of the payment exceeds the expenditure incurred by C in supplying, transferring or doing that thing.

(2C) This subsection applies if the amount of the payment is no more than would have been the case had the transaction been entered into at arm’s length.

(2D) A transaction would have been entered into “at arm’s length” if it made “the arm’s length provision” within the meaning of Part 4 of TIOPA 2010 (and for this purpose any limitation on the application of that Part is to be disregarded).

(2E) Subsections (2F) and (2G) apply if—

(a) the supply by C to the company is one of a sequence of transactions in which the thing supplied has been supplied by one person to another, and

(b) either—

(i) each transacting party in the sequence is connected to at least one other transacting party in the sequence, or

(ii) each transaction in the sequence is entered into in furtherance of a single scheme or arrangement (of whatever kind, and whether or not legally enforceable).

(2F) The reference to C in subsection (2B)(c) is to be read as a reference to the supplier in the first transaction in the sequence.

(2G) The reference to the transaction in subsection (2C) is to be read as including each transaction in the sequence.

(2H) In this section, “payment” includes any transfer of value.

(3) The Treasury may by regulations amend paragraph (c) of subsection (1) so as to substitute a later date for the date for the time being specified in that paragraph.

Museums and galleries exhibition tax credits

Museums and galleries exhibition tax credit claimable if company has surrenderable loss

1218ZCH

(1) A company which qualifies for museums and galleries exhibition tax relief in relation to the production of an exhibition may claim a museums and galleries exhibition tax credit in relation to the production for an accounting period in which the company has a surrenderable loss.

(2) Section 1218ZCI sets out how to calculate the amount of any surrenderable loss that the company has in the accounting period.

(3) A company making a claim may surrender the whole or part of its surrenderable loss in the accounting period.

(4) Subject to section 1218ZCK, the amount of the museums and galleries exhibition tax credit to which a company making a claim is entitled for the accounting period is—

(a) 45% of the amount of the loss surrendered if the exhibition is a touring exhibition (see section 1218ZAB), or

(b) 40% of the amount of the loss surrendered if the exhibition is not a touring exhibition.

(5) The company’s available loss for the accounting period (see section 1218ZCI(2)) is reduced by the amount surrendered.

Amount of surrenderable loss

1218ZCI

(1) The company’s surrenderable loss in the accounting period is—

(a) the company’s available loss for the period in the separate exhibition trade (see subsections (2) and (3)), or

(b) if less, the available qualifying expenditure for the period (see subsections (4) and (5)).

(2) The company’s available loss for an accounting period is—

$$L+RUL$where—L is the amount of the company’s loss for the period in the separate exhibition trade, andRUL is the amount of any relevant unused loss of the company (see subsection (3)).$

(3) The “relevant unused loss” of a company is so much of any available loss of the company for the previous accounting period as has not been—

(a) surrendered under section 1218ZCH, or

(b) carried forward under section 45 or 45B of CTA 2010 and set against profits of the separate exhibition trade.

(4) For the first period of account during which the separate exhibition trade is carried on, the available qualifying expenditure is the amount that is E for that period for the purposes of section 1218ZCF(2).

(5) For any period of account after the first, the available qualifying expenditure is—

$$E−S$where—E is the amount that is E for that period for the purposes of section 1218ZCF(3), andS is the total amount previously surrendered under section 1218ZCH.$

(6) If a period of account of the separate exhibition trade does not coincide with an accounting period, any necessary apportionments are to be made by reference to the number of days in the periods concerned.

Payment in respect of museums and galleries exhibition tax credit

1218ZCJ

(1) If a company—

(a) is entitled to a museums and galleries exhibition tax credit for an accounting period, and

(b) makes a claim,

the Commissioners for Her Majesty’s Revenue and Customs (“the Commissioners”) must pay the amount of the credit to the company.

(2) An amount payable in respect of—

(a) a museums and galleries exhibition tax credit, or

(b) interest on a museums and galleries exhibition tax credit under section 826 of ICTA,

may be applied in discharging any liability of the company to pay corporation tax.

To the extent that it is so applied the Commissioners’ liability under subsection (1) is discharged.

(3) If the company’s company tax return for the accounting period is enquired into by the Commissioners, no payment in respect of a museums and galleries exhibition tax credit for that period need be made before the Commissioners’ enquiries are completed (see paragraph 32 of Schedule 18 to FA 1998).

In those circumstances the Commissioners may make a payment on a provisional basis of such amount as they consider appropriate.

(4) No payment need be made in respect of a museums and galleries exhibition tax credit for an accounting period before the company has paid to the Commissioners any amount that it is required to pay for payment periods ending in that accounting period—

(a) under PAYE regulations, or

(b) in respect of Class 1 national insurance contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

(4A) For the purposes of subsection (4), a “payment period” is—

(a) in relation to PAYE regulations or Class 1 national insurance contributions, a period—

(i) which ends on the fifth day of a month, and

(ii) for which the company is liable to account for income tax and national insurance contributions to an officer of Revenue and Customs;

(b) in relation to section 966 of ITA 2007, a period for which the company is required to make a return as described in section 969(1)(b) of that Act.

(5) A payment in respect of a museums and galleries exhibition tax credit is not income of the company for any tax purpose.

Maximum museums and galleries exhibition tax credits payable

1218ZCK

(1) Subsections (2) and (3) prescribe the maximum amount of museums and galleries exhibition tax credits which may be paid to a company under section 1218ZCJ in respect of the company’s separate exhibition trade.

(2) Where the separate exhibition trade relates to the production of a touring exhibition, the maximum amount which may be paid to the company is £100,000.

(3) Where the separate exhibition trade relates to the production of an exhibition which is not a touring exhibition, the maximum amount which may be paid to the company is £80,000.

(4) In accordance with Commission Regulation (EU) No. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market, the total amount of museums and galleries exhibition tax credits payable under section 1218ZCJ in the case of any undertaking is not to exceed 75 million euros per year.

1218ZCL

(1) In determining for the purposes of this Chapter the amount of costs incurred on a production of an exhibition at the end of a period of account, ignore any amount that has not been paid 4 months after the end of that period.

(2) This is without prejudice to the operation of section 1218ZBD (when costs are taken to be incurred).

Anti-avoidance etc

Tax avoidance arrangements

1218ZCM

(1) A company does not qualify for museums and galleries exhibition tax relief in relation to the production of an exhibition if there are any tax avoidance arrangements relating to the production.

(2) Arrangements are “tax avoidance arrangements” if their main purpose, or one of their main purposes, is the obtaining of a tax advantage.

(3) In this section—

“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;

“tax advantage” has the meaning given by section 1139 of CTA 2010.

1218ZCN

(1) A transaction is to be ignored for the purpose of determining museums and galleries exhibition tax relief so far as the transaction is attributable to arrangements (other than tax avoidance arrangements) entered into otherwise than for genuine commercial reasons.

(2) In this section “arrangements” and “tax avoidance arrangements” have the same meaning as in section 1218ZCM.

CHAPTER 4 — Losses of separate exhibition trade

Application of sections 1218ZDA to 1218ZDC

1218ZD

(1) Sections 1218ZDA to 1218ZDC apply to a company which is treated under section 1218ZB(2) as carrying on a separate trade in relation to the production of an exhibition.

(2) In those sections “the completion period” means the accounting period in which the company ceases to carry on the separate exhibition trade.

Restriction on use of losses before completion period

1218ZDA

(1) This section applies if a loss is made by the company in the separate exhibition trade in an accounting period preceding the completion period.

(2) The loss is not available for loss relief, except to the extent that the loss may be carried forward under section 45 or 45B of CTA 2010 to be deducted from profits of the separate exhibition trade in a subsequent period.

(3) If the loss is carried forward under section 45 or 45B of CTA 2010 and deducted from profits of the separate exhibition trade in a subsequent period, the deduction is to be ignored for the purposes of section 269ZB of CTA 2010 (restriction on deductions from trading profits).

(4) In this section “loss relief” includes any means by which a loss might be used to reduce the amount in respect of which a company, or any other person, is chargeable to tax.

Use of losses in the completion period

1218ZDB

(1) Subsection (2) applies if a loss made in the separate exhibition trade is carried forward under section 45 or 45B of CTA 2010 to the completion period.

(2) So much (if any) of the loss as is not attributable to museums and galleries exhibition tax relief (see subsection (4)) may be treated for the purposes of section 37 and Part 5 of CTA 2010 as if it were a loss made in the completion period.

(3) If a loss is made in the separate exhibition trade in the completion period, the amount of the loss that may be—

(a) deducted from total profits of the same or an earlier period under section 37 of CTA 2010, or

(b) surrendered as group relief under Part 5 of that Act,

is restricted to the amount (if any) that is not attributable to museums and galleries exhibition tax relief (see subsection (4)).

(4) The amount of a loss in any period that is attributable to museums and galleries exhibition tax relief is found by—

(a) calculating what the amount of the loss would have been if there had been no additional deduction under Chapter 3 in that or any earlier period, and

(b) deducting that amount from the total amount of the loss.

(5) This section does not apply to a loss surrendered, or treated as carried forward, under section 1218ZDC (terminal losses).

Terminal losses

1218ZDC

(1) This section applies if—

(a) the company ceases to carry on the separate exhibition trade, and

(b) if the company had not ceased to carry on that trade, it could have carried forward an amount under section 45 or 45B of CTA 2010 to be set against profits of that trade in a later period (“the terminal loss”).

Below in this section the company is referred to as “company A” and the separate exhibition trade is referred to as “trade 1”.

(2) If company A—

(a) is treated under section 1218ZB(2) as carrying on a separate trade in relation to the production of another exhibition (“trade 2”), and

(b) is carrying on trade 2 when it ceases to carry on trade 1,

company A may (on making a claim) make an election under subsection (3).

(3) The election is to have the terminal loss (or a part of it) treated—

(a) in a case where the loss could have been carried forward under section 45 of CTA 2010 had trade 1 not ceased, as if it were a loss carried forward under that section to be set against the profits of trade 2 of the first accounting period beginning after the cessation and so on, and

(b) in a case where the loss could have been carried forward under section 45B of CTA 2010 had trade 1 not ceased, as if it were a loss made in trade 2 which has been carried forward under that section to the first accounting period beginning after the cessation.

(4) Subsection (5) applies if—

(a) another company (“company B”) is treated under section 1218ZB(2) as carrying on a separate trade (“company B’s trade”) in relation to the production of—

(i) the exhibition which is the subject of trade 1, or

(ii) another exhibition,

(b) company B is carrying on company B’s trade when company A ceases to carry on trade 1, and

(5) Company A may surrender the loss (or a part of it) to company B.

(6) On the making of a claim by company B the amount surrendered is treated—

(a) in a case where the amount could have been carried forward under section 45 of CTA 2010 had trade 1 not ceased, as if it were a loss carried forward by company B under that section to be set against the profits of company B’s trade of the first accounting period beginning after the cessation and so on, and

(b) in a case where the amount could have been carried forward under section 45B of CTA 2010 had trade 1 not ceased, as if it were a loss made in company B’s trade which has been carried forward under that section to the first accounting period beginning after the cessation.

(7) The Treasury may by regulations make administrative provision in relation to the surrender of a loss under subsection (5) and the resulting claim under subsection (6).

(8) “Administrative provision” means provision corresponding, subject to such adaptations or other modifications as appear to the Treasury to be appropriate, to that made by Part 8 of Schedule 18 to FA 1998 (company tax returns: claims for group relief).

(9) A deduction under section 45 or 45B of CTA 2010 which is made in reliance on this section is to be ignored for the purposes of section 269ZB of that Act (restriction on deductions from trading profits).

CHAPTER 5 — Provisional entitlement to relief

Provisional entitlement to relief

1218ZE

(1) In relation to a company and the production of an exhibition, “interim accounting period” means any accounting period that—

(a) is one in which the company carries on the separate exhibition trade, and

(b) precedes the accounting period in which it ceases to do so.

(2) A company is not entitled to museums and galleries exhibition tax relief for an interim accounting period unless—

(a) its company tax return for the period states the amount of planned core expenditure on the production of the exhibition that is UK expenditure (see section 1218ZCC(2)), and

(b) that amount is such as to indicate that the UK expenditure condition (see section 1218ZCC) will be met.

If those requirements are met, the company is provisionally treated in relation to that period as if the UK expenditure condition were met.

Clawback of provisional relief

1218ZEA

(1) If a statement is made under section 1218ZE(2) but it subsequently appears that the UK expenditure condition will not be met on the company’s ceasing to carry on the separate exhibition trade, the company—

(a) is not entitled to museums and galleries exhibition tax relief for any period for which its entitlement depended on such a statement, and

(b) must amend accordingly its company tax return for any such period.

(2) When a company ceases to carry on the separate exhibition trade, the company’s company tax return for the period in which that cessation occurs must—

(a) state that the company has ceased to carry on the separate exhibition trade, and

(b) be accompanied by a final statement of the amount of the core expenditure on the production of the exhibition that is UK expenditure.

(3) If that statement shows that the UK expenditure condition is not met—

(a) the company is not entitled to museums and galleries exhibition tax relief or to relief under section 1218ZDC (transfer of terminal losses) for any period, and

(b) must amend accordingly its company tax return for any period for which such relief was claimed.

(4) Any amendment or assessment necessary to give effect to this section may be made despite any limitation on the time within which an amendment or assessment may normally be made.

CHAPTER 6 — Interpretation

Regulations about activities in relation to an exhibition

1218ZF

The Treasury may by regulations amend section 1218ZBC (costs of the production) or 1218ZCD (“core expenditure”) for the purpose of providing that activities of a specified description are, or are not, to be regarded as activities involved in developing or (as the case may be) producing, running, deinstalling or closing—

(a) an exhibition, or

(b) an exhibition of a specified description.

Interpretation

1218ZFA

In this Part—

“company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1) of that Schedule);

“core expenditure” has the meaning given by section 1218ZCD;

“costs”, in relation to an exhibition, has the meaning given by section 1218ZBC;

“exhibition” has the meaning given by section 1218ZAA;

“income”, in relation to an exhibition, has the meaning given by section 1218ZBB;

“museums and galleries exhibition tax relief” is to be read in accordance with Chapter 3 (see in particular section 1218ZC(1));

“primary production company” has the meaning given by section 1218ZAC;

“qualifying expenditure” has the meaning given by section 1218ZCG;

“secondary production company” has the meaning given by section 1218ZAD;

“the separate exhibition trade” is to be read in accordance with section 1218ZB;

“touring exhibition” has the meaning given by section 1218ZAB.

“UK expenditure” has the meaning given by section 1218ZCC(2);

“UK expenditure condition” has the meaning given by section 1218ZCC(1).

Calculation of profits or losses of separate theatrical trade

Overview of Part

Orchestra tax credit claimable if company has surrenderable loss

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Grants treated as being at market value

849AB

(1) This section applies if—

(a) a company which holds an intangible asset grants a licence or other right in respect of the asset to a related party, or

(b) a company is granted a licence or other right in respect of an intangible asset by a related party that holds the asset.

(2) The grant of the licence or other right is treated for all purposes of the Taxes Acts as being at market value as respects the grantor if—

(a) the licence or other right was actually granted at less than market value, and

(b) condition A or B is met.

(3) The grant of the licence or other right is treated for all purposes of the Taxes Acts as being at market value as respects the grantee if—

(a) the licence or other right was actually granted at more than market value, and

(b) condition A or B is met.

(4) Condition A is that the asset is a chargeable intangible asset in relation to the grantor immediately before the licence or right in respect of it is granted.

(5) Condition B is that the licence or right is a chargeable intangible asset in relation to the grantee immediately after it is granted.

(6) This section is subject to—

(a) section 849AC (grants not at arm's length), ...

(b) section 849AD (grants involving other taxes), and

(7) References in subsection (1) to a related party in relation to a company are to be read as including references to a person in circumstances where the participation condition is met as between that person and the company.

(8) References in subsection (7) to a company include a firm in a case where, for the purposes of section 1259, references in subsection (1) to a company are read as references to the firm.

(9) Section 148 of TIOPA 2010 (when the participation condition is met) applies for the purposes of subsection (7) as it applies for the purposes of section 147(1)(b) of TIOPA 2010.

(10) Subsection (11) applies where—

(a) a gain on the grant by a firm of a licence or other right in respect of an intangible fixed asset is a gain to be taken into account for the purposes of section 1259, and

(b) for those purposes, references in subsection (1) to a company are read as references to the firm.

(11) Where this subsection applies, the gain referred to in subsection (10)(a) is to be treated for the purposes of this section as if it were a chargeable realisation gain for the purposes of section 741(1) (meaning of “chargeable intangible asset”).

(12) In this section—

“market value” means the price the licence or right might reasonably be expected to fetch on a sale in the open market, and

“the Taxes Acts” means the enactments relating to income tax, corporation tax or chargeable gains.

849AC

(1) This section applies if the consideration for the grant of a licence or other right would, but for this section, fall to be adjusted as respects one of the parties to the grant (“the relevant party”) under both—

(a) section 849AB, and

(b) Part 4 of TIOPA 2010 (provision not at arm's length).

(2) The consideration for the grant is not to be adjusted as respects the relevant party under Part 4 of TIOPA 2010 if the adjustment that falls to be made under section 849AB is greater than the adjustment that would otherwise fall to be made under that Part.

(3) The consideration for the grant is not to be adjusted under section 849AB if the adjustment that falls to be made as respects the relevant party under Part 4 of TIOPA 2010 is greater than or equal to the adjustment that would otherwise fall to be made under that section.

849AD

(1) This section applies if—

(a) in a case where section 849AB applies and the licence or other right is granted by the company to a related party, the grant is at less than its market value,

(b) in a case where that section applies and the licence or other right is granted to the company by a related party, the grant is at more than its market value, and

(2) Condition A is that the related party—

(a) is not a company, or

(b) is a company in relation to which—

(i) in a case within subsection (1)(a), the licence or other right is not a chargeable intangible asset immediately after the grant to it, or

(ii) in a case within subsection (1)(b), the relevant asset is not a chargeable intangible asset immediately before the grant by it.

(3) Condition B is that the grant of the licence or right—

(a) gives rise to an amount to be taken into account in calculating any person's income, profits or losses for tax purposes because of a relevant provision, or

(b) would do so apart from section 849AB(2) or (3).

(4) If this section applies, section 849AB(2) and (3) does not apply in relation to the calculation referred to in subsection (3) for the purposes of any relevant provision.

(5) In this section “relevant provision” means—

(a) Chapter 2 of Part 23 of CTA 2010 (matters which are distributions), except section 1000(2), and

(b) Part 3 of ITEPA 2003 (employment income: earnings and benefits etc treated as earnings).

1258A

(1) This section applies if—

(a) a partner in a firm is partner as trustee for a beneficiary who is absolutely entitled to the partner's share of the profits of the firm, and

(b) the beneficiary is chargeable to tax on those profits.

(2) References in this Part to a partner or member of the firm include references to the beneficiary.

40A

(1) This section applies where—

(a) a company (“the paying company”) makes a payment to, or for the benefit of, a director of the paying company in respect of the director’s employment as a director of the paying company,

(b) the payment would otherwise be employment income of the director chargeable to tax under Part 2 of ITEPA 2003,

(c) the director was or is a member of a firm, or was appointed by a company (“the appointing company”) other than the paying company, and

(d) condition A or B is met.

(2) The payment is to be treated for corporation tax purposes as a receipt of—

(a) a trade carried on by the firm, or

(b) a trade carried on by the appointing company.

(3) Condition A applies where the director is a member of a firm, and is that—

(a) the director carries on a profession,

(b) being a director of a company is a normal incident of that profession and of membership of the firm,

(d) the amount of the payment is insubstantial, compared with the total amount brought into account as receipts when calculating the firm’s profits.

(4) Condition B applies where the director is appointed by a company, and is that—

(a) the profits of the appointing company are within the charge to corporation tax,

(b) by virtue of an agreement with the appointing company, the director is required to account for the payment to that company, and

(5) This subsection applies if the appointing company had the right to appoint the director by virtue of its shareholding in, or an agreement with, the paying company.

(6) This subsection applies if the appointing company is not one over which—

(a) the director has control, or

(b) any person connected with the director has control, or

(7) For the purposes of subsection (6) the following persons are connected with the director: the spouse, civil partner, parent, child, son-in-law or daughter-in-law of the director.

40B

(1) This section applies where—

(a) a payment is received by an individual who carries on a profession in partnership,

(b) the payment is made to the individual in his or her capacity as an employee or office-holder, but is not made in respect of employment as a director of a company,

(d) the conditions in subsection (3) are met.

(2) The payment is to be treated for corporation tax purposes as a receipt of a trade carried on by the firm.

(3) The conditions referred to in subsection (1)(d) are that—

(a) the time spent by the individual in performing the duties of the office or employment is insubstantial compared with the time spent by the individual in carrying on the profession,

(b) the office or employment is related to the profession carried on by the individual,

(c) the amount of the payment is insubstantial compared with so much of the total amount brought into account as receipts when calculating the firm’s profits as is attributable to the individual, and

(d) the individual is required by the terms of the partnership agreement to account to the firm for the payment and does so.

320B

(1) This section applies if in accordance with generally accepted accounting practice, an amount in respect of a hybrid capital instrument relating to any of the matters in section 306A(1) of CTA 2009—

(a) is recognised in equity or shareholders' funds for a period, and

(b) is not recognised in the company's accounts for the period as an item of profit or loss or as an item of other comprehensive income.

(2) The amount is to be brought into account for the period for the purposes of this Part in the same way as an amount which is brought into account as a credit or debit in determining the company's profit or loss for the period in accordance with generally accepted accounting practice.

(3) But this section does not bring into account for the purposes of this Part any exchange gain or loss of the company which is recognised in the company's statement of total recognised gains and losses, statement of recognised income and expense, statement of changes in equity or statement of income and retained earnings.

352B

(1) This section applies if—

(a) section 349 applies in respect of a loan relationship of a company for an accounting period (application of amortised cost basis to connected companies relationships),

(b) the company is a party to another loan relationship (“the external loan relationship”) in respect of which that section does not apply for the period,

(c) the external loan relationship is a debtor relationship dealt with in its accounts on the basis of fair value accounting, and

(d) the external loan relationship has a qualifying link with one or more other loan relationships of the company.

(2) For this purpose the external loan relationship has “a qualifying link” with one or more other loan relationships of the company if—

(a) each of those other loan relationships of the company is a loan relationship in respect of which section 349 applies for the accounting period, and

(b) taking those other loan relationships together, the money received by the company under the external loan relationship is wholly or mainly used to lend money under those other loan relationships.

(3) The credits and debits which are to be brought into account for the purposes of this Part in respect of the external loan relationship for the period are to be determined on an amortised cost basis of accounting.

(4) If a company has a hedging relationship between—

(a) a relevant contract (“the hedging instrument”), and

(b) the liability representing the external loan relationship,

it is to be assumed in applying the amortised cost basis of accounting for the purposes of subsection (3) that the hedging instrument has where possible been designated for accounting purposes as a fair value hedge of that loan relationship.

Hybrid capital instruments

420A

(1) This section applies if a loan relationship is a hybrid capital instrument for an accounting period of the debtor.

(2) The Corporation Tax Acts have effect in relation to any person in respect of times in the accounting period as if any qualifying amount payable in respect of the hybrid capital instrument were not a distribution.

(3) An amount is a “qualifying amount” so far as it would not be regarded as a distribution if it is assumed that any provision made by the loan relationship under which the debtor is entitled to defer or cancel a payment of interest under the loan relationship had not been made.

(4) This section also needs to be read together with section 1015(1A) of CTA 2010 (which prevents hybrid capital instruments from being “special securities” as a result of being equity notes).

Meaning of “hybrid capital instrument”

475C

(1) For the purposes of this Part, a loan relationship is a “hybrid capital instrument” for an accounting period of the debtor if—

(a) the loan relationship makes provision under which the debtor is entitled to defer or cancel a payment of interest under the loan relationship,

(b) the loan relationship has no other significant equity features, and

(2) For the purposes of this section a loan relationship “has no other significant equity features” if under the loan relationship—

(a) there are neither voting rights in the debtor (ignoring insignificant voting rights in the debtor) nor a right to exercise a dominant influence over the debtor,

(b) any provision for altering the amount of the debt is limited to write-down or conversion events in qualifying cases, and

(c) any provision for the creditor to receive anything other than interest or repayment of the debt is limited to conversion events in qualifying cases.

(3) For the purposes of subsection (2)(a)—

(a) the loan relationship makes provision for “insignificant voting rights in the debtor” if (and only if) the voting rights of any creditor under the loan relationship are limited to one vote exercisable in relation to matters generally affecting the debtor without conferring any special advantage or other right on the creditor, and

(b) “a right to exercise a dominant influence over the debtor” means a right to give directions with respect to the debtor’s operating and financial policies with which it is obliged to comply (whether or not they are for the debtor’s benefit).

(4) For the purposes of subsection (2)(b) a “write-down event” means—

(a) a permanent release of some or all of the debt, or

(b) a reduction in the amount of the debt (including to nil) in a case where provision is made for the reduction to be temporary (whether on the meeting of conditions or the exercise of a right or otherwise).

(5) For the purposes of subsection (2) a “conversion event” means—

(a) the conversion of the loan relationship into shares forming part of the debtor’s ordinary share capital, or

(b) the conversion of the loan relationship into shares forming part of the ordinary share capital of a company (“C”) which, after the conversion, has control of the debtor or would have control of the debtor if C were taken to have all the rights and interests in the debtor of any company connected with C.

...

(6) For the purposes of subsection (2), a loan relationship makes provision for a qualifying case if—

(a) the provision applies only in the event that there is a material risk of the debtor becoming unable to pay its debts as they fall due,

(b) the provision applies only in the event that the value of the debtor’s assets is less than the amount of its liabilities, taking into account contingent and prospective liabilities, or

(c) the provision is included in the loan relationship solely because of a need to comply with a regulatory or other legal requirement,

and, in each case, the provision in question does not include a right exercisable by the creditor.

(7) Provision is not to be regarded as failing to meet the condition in subsection (2)(b) merely because, in the case of a write-down event mentioned in subsection (4)(b), it provides for a subsequent increase in the amount of the debt (but not above the original amount).

(8) An election under this section—

(a) is irrevocable,

(b) must be made before the end of the period of 6 months beginning with—

(i) the day on which the company becomes a party to the loan relationship, or

(ii) if (after becoming a party to the loan relationship) the loan relationship is amended so as to meet the conditions in subsection (1)(a) and (b), the first day of the company’s next accounting period, and

(c) has effect for the accounting period in which the day mentioned in paragraph (b)(i) or (ii) falls and for subsequent accounting periods.

(9) But an election under this section has no effect if—

(a) the company is a party to the loan relationship directly or indirectly in consequence of, or otherwise in connection with, any arrangements (within the meaning of section 455C(2)), and

(b) the main purpose of, or one of the main purposes of, the arrangements is to secure a tax advantage for the company or any other person.

782A

(1) Section 780 does not apply if a company ceases to be a member of a group because of a relevant disposal of shares by another company.

(2) A disposal of shares by a company is “relevant” if—

(a) the company would not be chargeable to corporation tax in respect of any gain accruing on the disposal by reason of the exemption conferred by paragraph 1 of Schedule 7AC to TCGA 1992 (assuming the company was within the charge to corporation tax), and

(b) the disposal is not part of an arrangement under which the recipient of the shares is to dispose of any of them to another person.

(3) For the purposes of subsection (2)(a) ignore paragraph 6 of Schedule 7AC to TCGA 1992 (cases in which exemptions do not apply).

863A

(1) This section applies if—

(a) an asset becomes a chargeable intangible asset in relation to a company by reason of an event specified in section 863(1)(a) or (b), and

(b) on the occurrence of that event the company becomes subject to an EU exit charge in respect of the asset.

(2) This Part applies as if the company had acquired the asset for its market value at the time it became a chargeable intangible asset in relation to the company.

(3) “EU exit charge” means a charge to tax under the law of a member State in accordance with Article 5(1) of Directive (EU) 2016/1164 of the European Parliament and of the Council of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market.

Chapter 15A — Debits in respect of goodwill and certain other assets

Introduction

879A

(1) This Chapter contains special rules about the debits to be brought into account by a company for tax purposes in respect of relevant assets.

(2) In this Chapter “relevant asset” means—

(a) goodwill in a business or part of a business,

(b) an intangible fixed asset that consists of information which relates to customers or potential customers of a business or part of a business,

(c) an intangible fixed asset that consists of a relationship (whether contractual or not) between a person carrying on a business and one or more customers of that business or part of that business,

(d) an unregistered trade mark or other sign used in the course of a business or part of a business, or

(e) a licence or other right in respect of an asset within any of paragraphs (a) to (d).

Requirement to write down at a fixed rate

879B

(1) This section applies if a company acquires or creates a relevant asset on or after 1 April 2019.

(2) The company is to be treated as having made an election under section 730 to write down the cost of the asset for tax purposes at a fixed rate.

(3) In its application in relation to the asset, section 731 (writing down at fixed rate: calculation) has effect as if in subsection (1)(a) for “4%” there was substituted “ 6.5% ”.

(4) The Treasury may by regulations amend subsection (3) so as to alter the percentage substituted for 4%.

Restrictions on debits: pre-FA 2019 relevant assets

879C

(1) This section applies in respect of a relevant asset of a company if it is a pre-FA 2019 relevant asset.

(2) No debits in respect of the asset are to be brought into account by the company for tax purposes under Chapter 3 (debits in respect of intangible fixed assets) or Chapter 15 (adjustments on change of accounting policy).

(3) Any debit in respect of the asset that is brought into account by the company for tax purposes under Chapter 4 (realisation of intangible fixed assets) is treated for the purposes of Chapter 6 as a non-trading debit.

(4) Sections 879D to 879H set out the cases in which a relevant asset of a company is a pre-FA 2019 relevant asset for the purposes of this Chapter.

879D

For the purposes of this Chapter a relevant asset of a company is a pre-FA 2019 relevant asset if—

(a) the company acquired or created the asset during the period beginning with 8 July 2015 and ending with 31 March 2019, and

(b) the asset was a chargeable intangible asset in relation to the company at any time during the period beginning with 29 October 2018 and ending with 31 March 2019.

879E

(1) For the purposes of this Chapter a relevant asset of a company (“C”) is a pre-FA 2019 relevant asset if—

(a) another company acquired or created the asset during the period beginning with 8 July 2015 and ending with 31 March 2019,

(b) it was a chargeable intangible asset in relation to that other company at any time during the period beginning with 29 October 2018 and ending with 31 March 2019, and

(c) C acquired the asset on or after 1 April 2019 otherwise than in case A or case B from a person who was a related party in relation to C.

(2) Case A is where—

(a) C acquired the asset from a company that was within the charge to corporation tax at the time of the acquisition, and

(b) the asset was not a pre-FA 2019 relevant asset in the hands of that company immediately before the acquisition.

(3) Case B is where C acquired the asset from a person (“the intermediary”) who acquired the asset on or after 1 April 2019 from a third person—

(a) who was not at the time of the intermediary's acquisition a related party in relation—

(i) to the intermediary, or

(ii) if the intermediary was not a company, to a company in relation to which the intermediary was a related party, and

(b) who is not, at the time of the acquisition by C, a related party in relation to C.

(4) References in this section to one person being (or not being) a related party in relation to another person are to be read as including references to the participation condition being met (or, as the case may be not being met) as between those persons.

(5) References in subsection (4) to a person include a firm in a case where, for section 1259 purposes, references in this section to a company are read as references to the firm.

(6) In subsection (5) “section 1259 purposes” means the purposes of determining under section 1259 the amount of profits or losses to be allocated to a partner in a firm.

(7) Section 148 of TIOPA 2010 (when the participation condition is met) applies for the purposes of subsection (4) as it applies for the purpose of section 147(1)(b) of TIOPA 2010.

879F

(1) For the purposes of this Chapter a relevant asset of a company (“C”) is a pre-FA 2019 relevant asset if—

(a) the relevant asset was created on or after 29 October 2018,

(b) C acquired the relevant asset on or after 1 April 2019 from a person (“the transferor”) who was a related party in relation to C at the time of the acquisition,

(d) the other asset meets the preserved status condition (see section 879G).

(2) But if only part of the value of the relevant asset derives from the other asset—

(a) the relevant asset is to be treated for the purposes of this Chapter as if it were two separate assets—

(i) one representing the part of the value of the relevant asset that does so derive, and

(ii) the other representing the part of the value of the relevant asset that does not so derive, and

(b) subsection (1) applies only in relation to the separate asset representing the part of the value of the relevant asset that does so derive.

(3) For the purposes of this section the cases in which the value of a relevant asset may be derived from another asset include any case where—

(a) assets have been merged or divided,

(b) assets have changed their nature, or

(4) Section 879G supplements this section.

879G

(1) For the purposes of section 879F the other asset meets the preserved status condition if subsection (2) or (3) applies.

(2) This subsection applies if the other asset—

(a) was acquired or created by a company during the period beginning with 8 July 2015 and ending with 31 March 2019, and

(b) was a chargeable intangible asset in the hands of that company at any time during the period beginning with 29 October 2018 and ending with 31 March 2019 when—

(i) that company and C were related parties, or

(ii) that company and the transferor were related parties.

(3) This subsection applies if the other asset was a pre-FA 2019 relevant asset in the hands of a company at any time during the period beginning with 1 April 2019 and ending with the acquisition mentioned in section 879F(1)(b) when—

(a) that company and C were related parties, or

(b) that company and the transferor were related parties.

(4) It does not matter for the purposes of section 879F(1)(a) who created the relevant asset.

(5) Any apportionment necessary for the purposes of section 879F(2) must be made on a just and reasonable basis.

(6) Section 879E(4) to (7) applies for the purposes of section 879F and this section.

(7) Expressions used in this section have the same meaning as in section 879F.

879H

(1) For the purposes of this Chapter a relevant asset of a company is a pre-FA 2019 relevant asset if—

(a) the company acquired the asset on or after 1 April 2019 directly or indirectly in consequence of, or otherwise in connection with, a disposal of a relevant asset by another person, and

(b) the asset disposed of would have been a pre-FA 2019 relevant asset in the hands of the company had the person transferred it to the company at the time of the disposal.

(2) For the purposes of this section it does not matter whether—

(a) the asset disposed of is the same asset as the acquired asset,

(b) the acquired asset is acquired at the time of the disposal, or

Restrictions on debits: no business or no qualifying IP assets acquired

879I

(1) This section applies in respect of a relevant asset of a company if the company acquires the asset on or after 1 April 2019 otherwise than as part of the acquisition of a business.

(2) This section also applies in respect of a relevant asset of a company if—

(a) the company acquires the asset on or after 1 April 2019 as part of the acquisition of a business, and

(b) the company does not acquire any qualifying IP assets as part of the acquisition of the business for use on a continuing basis in the course of the business.

(3) No debits in respect of the asset are to be brought into account by the company for tax purposes under Chapter 3 (debits in respect of intangible fixed assets) or Chapter 15 (adjustments on change of accounting policy).

(4) Any debit in respect of the asset that is brought into account by the company for tax purposes under Chapter 4 (realisation of intangible fixed assets) is treated for the purposes of Chapter 6 as a non-trading debit.

879J

(1) In section 879I “qualifying IP asset”, in relation to a company, means an intangible fixed asset that meets the following two conditions.

(2) The first condition is that the asset is—

(a) a patent, registered design, copyright or design right, plant breeders' right, or right under section 7 of the Plant Varieties Act 1997,

(b) a right under the law of a country or territory outside the United Kingdom corresponding or similar to a right within paragraph (a), or

(3) The second condition is that in the hands of the company the asset—

(a) is not to any extent excluded from this Part by Chapter 10, and

(b) is not a pre-FA 2002 asset (see section 881).

(4) The reference in subsection (2)(c) to a licence or other right does not include a licence or other right that permits the use of computer software but does not permit its manufacture, adaptation or supply.

(5) The Treasury may by regulations amend the meaning of qualifying IP asset for the purposes of this Chapter.

Restrictions on debits: acquisition from individual or firm

879K

(1) This section applies in respect of a relevant asset of a company if—

(a) the company acquires the asset on or after 1 April 2019 directly or indirectly from an individual or firm (“the transferor”),

(b) the related party condition is met, and

(2) The related party condition is met if—

(a) in a case where the transferor is an individual, the transferor is a related party in relation to the company at the time of the acquisition;

(b) in a case where the transferor is a firm, any individual who is a member of the transferor is a related party in relation to the company at that time.

(3) The third party acquisition condition is met if—

(a) in a case where the relevant asset is goodwill—

(i) the transferor acquired all or part of the relevant business in one or more third party acquisitions as part of which the transferor acquired goodwill, and

(ii) the relevant asset is acquired by the company as part of an acquisition of all the relevant business;

(b) in a case where the relevant asset is not goodwill—

(i) the transferor acquired the relevant asset in a third party acquisition, and

(ii) the relevant asset is acquired by the company as part of an acquisition of all the relevant business.

(4) No debits in respect of the asset are to be brought into account by the company for tax purposes under Chapter 3 (debits in respect of intangible fixed assets) or Chapter 15 (adjustments on change of accounting policy).

(5) Any debit in respect of the asset that is brought into account by the company for tax purposes under Chapter 4 (realisation of intangible fixed assets) is treated for the purposes of Chapter 6 as a non-trading debit.

879L

(1) This section applies for the purposes of section 879K(3).

(2) “Relevant business” means—

(a) in a case where the relevant asset is within paragraph (e) of subsection (2) of section 879A, the business or (as the case may be) the part of the business mentioned in the paragraph of that subsection within which the licensed asset falls, and

(b) in any other case, the business or (as the case may be) the part of the business mentioned in the paragraph of that subsection within which the relevant asset falls.

(3) The transferor acquires something in a “third party acquisition” if—

(a) the transferor acquires it from a company (“C”) and, at the time of that acquisition—

(i) if the transferor is an individual, the transferor is not a related party in relation to C, or

(ii) if the transferor is a firm, no individual who is a member of the transferor is a related party in relation to C, or

(b) the transferor acquires it from a person (“P”) who is not a company and, at the time of that acquisition—

(i) if the transferor is an individual, P is not connected with the transferor, or

(ii) if the transferor is a firm, no individual who is a member of the transferor is connected with P.

(4) But an acquisition is not a “third party acquisition” if—

(a) its main purpose, or one of its main purposes, is for any person to obtain a tax advantage (within the meaning of section 1139 of CTA 2010), or

(b) it occurs during the period beginning with 8 July 2015 and ending with 31 March 2019.

(5) In this section “connected” has the same meaning as in Chapter 12 (see section 842).

Partial restrictions on debits

879M

(1) Section 879O (the partial restrictions on debits) applies in respect of a relevant asset (“the asset concerned”) of a company if—

(a) the company acquires the asset concerned on or after 1 April 2019 as part of the acquisition of a business,

(b) the company also acquires qualifying IP assets as part of the acquisition of the business for use on a continuing basis in the course of the business, and

(2) But section 879O does not apply in respect of the asset concerned if either of the following sections applies in respect of it—

(a) section 879C (restrictions on debits: pre-FA 2019 relevant assets);

(b) section 879K (restrictions on debits: acquisition from individual or firm).

(3) The amount is—

$$A × N B$where—A is the expenditure incurred by the company for or in connection with the acquisition of the qualifying IP assets mentioned in subsection (1)(b),B is the expenditure incurred by the company for or in connection with the acquisition of the asset concerned and any other relevant assets acquired with the business, andN is 6.$

(4) The Treasury may by regulations amend the meaning of N.

(5) In this section—

“expenditure” means expenditure that is—capitalised for accounting purposes, orrecognised in determining the profit or loss of the company concerned without being capitalised for accounting purposes,subject to any adjustments under this Part or Part 4 of TIOPA 2010;

“qualifying IP asset” has the same meaning as in section 879I (see section 879J).

879N

(1) Section 879O (the partial restrictions on debits) also applies in respect of a relevant asset of a company if—

(a) the company acquires the asset on or after 1 April 2019 directly or indirectly from an individual or firm (“the transferor”),

(b) the related party condition is met,

(d) the amount in subsection (6) is less than 1.

(2) But section 879O does not apply in respect of the relevant asset if either of the following sections applies in respect of it—

(a) section 879C (restrictions on debits: pre-FA 2019 relevant assets);

(b) section 879I (restrictions on debits: no business or no qualifying IP assets acquired).

(3) The related party condition is met if—

(a) in a case where the transferor is an individual, the transferor is a related party in relation to the company at the time of the acquisition;

(b) in a case where the transferor is a firm, any individual who is a member of the transferor is a related party in relation to the company at that time.

(4) The third party acquisition condition is met if—

(a) in a case where the relevant asset is goodwill—

(i) the transferor acquired all or part of the relevant business in one or more third party acquisitions as part of which the transferor acquired goodwill, and

(ii) the relevant asset is acquired by the company as part of an acquisition of all the relevant business;

(b) in a case where the relevant asset is not goodwill—

(i) the transferor acquired the relevant asset in a third party acquisition, and

(ii) the relevant asset is acquired by the company as part of an acquisition of all the relevant business.

(5) Section 879L (meaning of relevant business and third party acquisition) applies for the purposes of this section.

(6) The amount is—

$$A B$where—A is the relevant accounting value of third party acquisitions (see subsections (7) to (9)), andB is the expenditure incurred by the company for or in connection with the acquisition of the relevant asset that is—capitalised by the company for accounting purposes, orrecognised in determining the company's profit or loss without being capitalised for accounting purposes,subject to any adjustments under this Part or Part 4 of TIOPA 2010.$

(7) In a case in which the relevant asset is goodwill, the relevant accounting value of third party acquisitions is the notional accounting value of the goodwill mentioned in subsection (4)(a)(i) (“the previously acquired goodwill”).

(8) In a case in which the relevant asset is not goodwill, the relevant accounting value of third party acquisitions is the notional accounting value of the relevant asset.

(9) The “notional accounting value” of the previously acquired goodwill, or the relevant asset, is what its accounting value would have been in GAAP-compliant accounts drawn up by the transferor—

(a) immediately before the relevant asset was acquired by the company, and

(b) on the basis that the relevant business was a going concern.

879O

(1) Where this section applies in respect of a relevant asset of a company, the following restrictions have effect.

(2) If a debit in respect of the relevant asset is to be brought into account by the company for tax purposes under a provision of Chapter 3 (debits in respect of intangible fixed assets) or Chapter 15 (adjustments on change of accounting policy), the amount of that debit is—

$$D × RA$where—D is the amount of the debit that would be brought into account disregarding this section (and, accordingly, for the purposes of any calculation of the tax written-down value of the relevant asset needed to determine D, this section's effect in relation to any debits previously brought into account is to be disregarded), andRA is the relevant amount (see subsection (6)).$

(3) If, but for this section, a debit in respect of any of the relevant assets would be brought into account by the company for tax purposes under a provision of Chapter 4 (realisation of intangible fixed assets), the following two debits are to be brought into account under that provision instead—

(a) a debit determined in accordance with subsection (4), and

(b) a debit determined in accordance with subsection (5), which is to be treated for the purposes of Chapter 6 as a non-trading debit (“the non-trading debit”).

(4) The amount of the debit determined in accordance with this subsection is—

$$D × RA$where—D is the amount of the debit that would be brought into account under Chapter 4 disregarding this section (and, accordingly, for the purposes of any calculation of the tax written down value of the relevant asset needed to determine D, this section's effect in relation to any debits previously brought into account is to be disregarded), andRA is the relevant amount (see subsection (6)).$

(5) The amount of the non-trading debit is—

$$D − TD$where—D is the amount of the debit that would be brought into account under Chapter 4 disregarding this section (but, for the purposes of any calculation of the tax written-down value of the relevant asset needed to determine D, this section's effect in relation to any debits previously brought into account is not to be disregarded), andTD is the amount of the debit determined in accordance with subsection (4).$

(6) In this section the “relevant amount” means—

(a) in a case where this section applies in respect of the relevant asset by reason only of section 879M, the amount in subsection (3) of that section;

(b) in a case where this section applies in respect of the relevant asset by reason only of section 879N, the amount in subsection (6) of that section;

(c) in a case where this section applies in respect of the relevant asset by reason of both section 879M and 879N, the amount found by multiplying the amount in subsection (3) of section 879M by the amount in subsection (6) of section 879N.

Supplementary

Date of acquisition of relevant asset

879P

(1) A company that acquires a relevant asset in pursuance of an unconditional obligation under a contract is to be treated for the purposes of this Chapter as having acquired the asset on the date on which the company became subject to that obligation or (if later) the date on which that obligation became unconditional.

(2) An obligation is unconditional if it may not be varied or extinguished by the exercise of a right (whether under contract or otherwise).

Overview of Chapter

“Company tax return”

Avoiding double counting of PAYE and NIC liabilities

“Company tax return”

Repeals and revocations

Income from Ulster Savings Certificates

Abbreviated references to Acts

Expenses of management of a company's investment business

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

Total opening negative amount: “matching”

Total expenditure on workers

“Going concern”

Pre-commencement debits of property businesses etc of non-UK resident companies

330ZA

(1) This section applies if—

(a) a non-UK resident company has debits in respect of a loan relationship to which it is a party for the purposes of its UK property business,

(b) the debits are referable to times (“the pre-rental times”) before (but not more than 7 years before) the date on which it starts to carry on the business, and

(2) If, on the assumption that the company had been carrying on the business at the pre-rental times, the debits—

(a) would have been recognised in determining its profit or loss for a period consisting of or including those times, and

(b) would have been brought into account for the purposes of this Part,

the debits are (so far as they exceed relevant credits) treated for the purposes of this Part as if they were debits for the accounting period in which it started to carry on the business.

(3) For this purpose “relevant credits” means credits of the company in respect of the loan relationship which, on the assumption that the company had been carrying on the business at the pre-rental times—

(a) would have been recognised in determining its profit or loss for a period consisting of or including those times,

(b) would have been brought into account for the purposes of this Part, and

(4) This section is subject to section 327 (disallowance of imported losses etc).

(5) This section also applies in relation to a non-UK resident company which is a party to a loan relationship for the purpose of enabling it to generate other UK property income (within the meaning given by section 5(6)).

Interpretation of section 375

Overview of Chapter

Exceptions to section 409

Persons indirectly standing in the position of creditor

Relevant non-lending relationships involving discounts

Application of Part 5 to relevant non-lending relationships

Exclusion where arrangement has no tax avoidance purpose

Excluded shares

Introduction to Chapter

Amounts not fully recognised for accounting purposes: introduction

607ZA

(1) This section applies if—

(a) a non-UK resident company has debits in respect of a derivative contract to which it is a party for the purposes of its UK property business,

(b) the debits are referable to times (“the pre-rental times”) before (but not more than 7 years before) the date on which it starts to carry on the business, and

(2) If, on the assumption that the company had been carrying on the business at the pre-rental times, the debits—

(a) would have been recognised in determining its profit or loss for a period consisting of or including those times, and

(b) would have been brought into account for the purposes of this Part,

the debits are (so far as they exceed relevant credits) treated for the purposes of this Part as if they were debits for the accounting period in which it started to carry on the business.

(3) For this purpose “relevant credits” means credits of the company in respect of the derivative contract which, on the assumption that the company had been carrying on the business at the pre-rental times—

(a) would have been recognised in determining its profit or loss for a period consisting of or including those times,

(b) would have been brought into account for the purposes of this Part, and

(4) This section also applies in relation to a non-UK resident company which is a party to a derivative contract for the purpose of enabling it to generate other UK property income (within the meaning given by section 5(6)).

793A

(1) This section applies if an election is made under section 792.

(2) If subsection (2) of section 793 applies to B the gain, or the part specified in the election, is treated as if it had accrued to B at the relevant time as a non-trading credit for the purposes of Chapter 6 (how credits and debits are given effect).

(3) If subsection (3) of section 793 applies to B the gain, or the part specified in the election, is treated—

(a) as if it had accrued to B at the relevant time as a non-trading credit for the purposes of Chapter 6, and

(b) as if it had accrued in respect of an asset held for the purposes of a permanent establishment of B in the United Kingdom.

(4) If subsection (3A) of section 793 applies to B the gain, or the part specified in the election, is treated for the purposes of Chapter 6 as if it had accrued to B at the relevant time as a credit in respect of an asset held for the purposes of B's trade of dealing in or developing UK land.

(5) If subsection (3B) of section 793 applies to B the gain, or the part specified in the election, is treated for the purposes of Chapter 6 as if it had accrued to B at the relevant time as a credit in respect of an asset held for the purposes of B's UK property business.

Income from the production

Claim for additional deduction

Transitional provisions and savings

Industrial development grants

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

Application of Chapter in relation to employees of overseas companies who work for companies in the UK

Chapter 16A — Debits in respect of assets that were pre-FA 2002 assets etc

Introduction

900A

(1) This Chapter contains special rules affecting the debits to be brought into account by a company for tax purposes in respect of an intangible fixed asset that is a restricted asset.

(2) Sections 900B to 900D make provision determining when an intangible fixed asset of a company is a restricted asset for the purposes of this Chapter.

(3) Sections 900E and 900F contain the special rules.

(4) The following sections contain supplementary provisions—

(a) section 900G (meaning of relieving acquisition),

(b) section 900H (when two persons are related), and

When an intangible fixed asset is a restricted asset

900B

(1) An intangible fixed asset of a company is a restricted asset if—

(a) the company acquired the asset on or after 1 July 2020,

(b) the company acquired the asset from a person who at the time of the acquisition was a related party in relation to the company, and

(2) The asset is within this subsection if—

(a) the asset was a pre-FA 2002 asset in the hands of any company on 1 July 2020, and

(b) at no time on or after 1 July 2020 has the asset been the subject of a relieving acquisition.

(3) The asset is within this subsection if—

(a) the asset was created before 1 April 2002,

(b) immediately before 1 July 2020 the asset was held by a person other than a company, and

(4) But the asset is not within subsection (3) if the person mentioned in that subsection (“the intermediary”) acquired the asset on or after 1 April 2002 from a person (“the third party”) who meets the conditions in subsections (5), (6) and (7).

(5) The third party meets the condition in this subsection if—

(a) the third party is not a company, or

(b) the third party is a company in relation to which the intermediary is not a related party at the time of the intermediary's acquisition.

(6) The third party meets the condition in this subsection if at the time of the intermediary's acquisition the third party is not a related party in relation to a company in relation to which the intermediary is a related party.

(7) The third party meets the condition in this subsection if at the time of the acquisition of the asset by the company mentioned in subsection (1) the third party is not a related party in relation to that company.

900C

(1) An intangible fixed asset of a company (“the asset concerned”) is a restricted asset if—

(a) the company acquired the asset concerned on or after 1 July 2020,

(b) the company acquired the asset concerned from a person who at the time of the acquisition was a related party in relation to the company, and

(2) The asset concerned is within this subsection if—

(a) the asset concerned was created on or after 1 July 2020,

(b) at no time has the asset concerned been the subject of a relieving acquisition,

(d) the other asset was a pre-FA 2002 asset or a restricted asset in the hands of any company on the date the asset concerned was created.

(3) The condition in subsection (2)(d) is to be treated as met if—

(a) the other asset was held by a person other than a company on the date the asset concerned was created,

(b) on the date the asset concerned was created that person was a related party in relation to a company, and

(c) the other asset would have been a pre-FA 2002 asset or a restricted asset in the hands of that company on the date the asset concerned was created had that company acquired the other asset from that person immediately before that date.

(4) For the purposes of this section the cases in which the value of an asset may be derived from any other asset include any case where—

(a) assets have been merged or divided,

(b) assets have changed their nature, or

900D

(1) An intangible fixed asset of a company (“the asset concerned”) is a restricted asset if—

(a) the company acquired the asset concerned on or after 1 July 2020, and

(b) the asset concerned is within subsection (2).

(2) The asset concerned is within this subsection if—

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