(3) If the accounting period falls within more than one financial year, the
amount of the Northern Ireland supplementary deduction is
determined by taking the following steps.

Step 1

5Calculate, for each financial year, the amount that would be the
Northern Ireland supplementary deduction for the accounting period
if it fell within only that financial year (see subsection (2)).

Step 2

Multiply each amount calculated under step 1 by the proportion of the
10accounting period that falls within the financial year for which it is
calculated.

Step 3

Add together each amount found under step 2.

357TD Tax credit: Northern Ireland supplementary deduction ignored

15For the purpose of determining the available loss of a company under
section 1217CH of CTA 2009 (video game tax credit claimable if
company has surrenderable loss) for any accounting period, any
Northern Ireland supplementary deduction made by the company in
the period (and any Northern Ireland supplementary deduction made
20in any previous accounting period) is to be ignored.

357TE Artificially inflated claims for additional deduction

Section 1217CL(1)(a) and (2)(a) of CTA 2009 (artificially inflated claims
for additional deduction or film tax credit) has effect as if references to
an additional deduction under Chapter 3 of Part 15B of that Act
25included a Northern Ireland supplementary deduction under this
Chapter.

Video game losses

357TF Restriction on use of losses while video game in development

(1) Section 1217DA of CTA 2009 (restriction on use of losses while video
30game in development) has effect subject as follows.

(2) The reference in subsection (1) of that section to a loss made in the
separate video game trade in a pre-completion period is, if the
company is a Northern Ireland company in that period, a reference to—

(a) any Northern Ireland losses of the trade of the period, or

(b) 35any mainstream losses of the trade of the period;

and references to losses in subsection (2) of that section are to be read
accordingly.

(3) Subsection (4) applies if a Northern Ireland company has, in a pre-
completion period—

(a) 40both Northern Ireland losses of the trade and mainstream
profits of the trade, or

(b) both mainstream losses of the trade and Northern Ireland
profits of the trade.

(4) The company may make a claim under section 37 (relief for trade losses
45against total profits) for relief for the losses mentioned in subsection
(3)(a) or (b).

(5) But relief on such a claim is available only—

(a) in the case of a claim for relief for Northern Ireland losses,
against mainstream profits of the trade of the same period;

(b) in the case of a claim for relief for mainstream losses, against
5Northern Ireland profits of the trade of the same period.

(6) In this section “a pre-completion period” has the same meaning as in
section 1217DA of CTA 2009 (see section 1217D(2) of that Act).

357TG Use of losses in later periods

(1) Section 1217DB of CTA 2009 (use of losses in later periods) has effect
10subject as follows.

(2) The reference in subsection (2) of that section to a loss made in the
separate video game trade is, in relation to a loss made in a period in
which the company is a Northern Ireland company, a reference to—

(a) any Northern Ireland losses of the trade of the period, or

(b) 15any mainstream losses of the trade of the period;

and references to losses in subsections (3) and (6) of that section are to
be read accordingly.

(3) The reference in subsection (4) of that section to a loss made in the
separate video game trade in a relevant later period is, where the
20company is a Northern Ireland company in the period, a reference to—

(a) any Northern Ireland losses of the trade of the period, or

(b) any mainstream losses of the trade of the period;

and references to losses in subsections (5) and (6) of that section are to
be read accordingly.

(4) 25Subsection (6) of that section has effect, in relation to Northern Ireland
losses, as if the reference to an additional deduction under Chapter 3 of
Part 15B of that Act included a reference to a Northern Ireland
supplementary deduction under this Chapter.

357TH Terminal losses

(1) 30Section 1217DC of CTA 2009 (terminal losses) has effect subject as
follows.

(2) Where—

(a) a company makes an election under subsection (3) of that
section (election to treat terminal loss as loss brought forward of
35different trade) in relation to all or part of a terminal loss, and

(b) the terminal loss is a Northern Ireland loss,

that subsection has effect as if the reference in it to a loss brought
forward were to a Northern Ireland loss brought forward.

(3) Where—

(a) 40a company makes a claim under subsection (6) of that section
(claim to treat terminal loss as loss brought forward by different
company) in relation to part or all of a terminal loss, and

(b) the terminal loss is a Northern Ireland loss,

that subsection has effect as if the reference in it to a loss brought
45forward were to a Northern Ireland loss brought forward.

CHAPTER 14 Theatrical productions

Introductory

357U Introduction and interpretation

(1) This Chapter makes provision about the operation of Part 15C of CTA
52009 (theatrical productions) in relation to expenditure incurred by a
company in an accounting period in which it is a Northern Ireland
company.

(2) In this Chapter—

(a) “Northern Ireland expenditure” means expenditure incurred in
10a trade to the extent that the expenditure forms part of the
Northern Ireland profits or Northern Ireland losses of the trade;

(b) “the separate theatrical trade” has the same meaning as in Part
15C of CTA 2009 (see section 1217I of that Act);

(c) “qualifying expenditure” has the same meaning as in that Part
15(see section 1217JA of that Act).

Tax relief for theatrical productions

357UA Northern Ireland additional deduction

(1) In this Chapter “a Northern Ireland additional deduction” means so
much of a deduction under section 1217H of CTA 2009 (claim for
20additional deduction) as is calculated by reference to qualifying
expenditure that is Northern Ireland expenditure.

(2) A Northern Ireland additional deduction forms part of the Northern
Ireland profits or Northern Ireland losses of the separate theatrical
trade.

357UB 25 Northern Ireland supplementary deduction

(1) This section applies where—

(a) a company is entitled under section 1217H of CTA 2009 to an
additional deduction in calculating the profit or loss of the
separate theatrical trade in an accounting period,

(b) 30the company is a Northern Ireland company in the period,

(c) the additional deduction is wholly or partly a Northern Ireland
additional deduction, and

(d) any of the following conditions is met—

(i) the company does not have a surrenderable loss in the
35accounting period;

(ii) the company has a surrenderable loss in the accounting
period, but does not make a claim under section 1217K
of CTA 2009 (theatre tax credit claimable if company has
surrenderable loss) for the period;

(iii) 40the company has a surrenderable loss in the accounting
period and makes a claim under that section for the
period, but the amount of Northern Ireland losses

surrendered on the claim is less than the Northern
Ireland additional deduction.

(2) The company is entitled to make another deduction (“a Northern
Ireland supplementary deduction”) in respect of qualifying
5expenditure.

(3) See section 357UC for provision about the amount of the Northern
Ireland supplementary deduction.

(4) The Northern Ireland supplementary deduction—

(a) is made in calculating the profit or loss of the separate theatrical
10trade, and

(b) forms part of the Northern Ireland profits or Northern Ireland
losses of the separate theatrical trade.

(5) In this section “surrenderable loss” has the meaning given by section
1217KA of CTA 2009.

357UC 15 Northern Ireland supplementary deduction: amount

(1) This section contains provision for the purposes of section 357UB(2)
about the amount of the Northern Ireland supplementary deduction.

(2) If the accounting period falls within only one financial year, the amount
of the Northern Ireland supplementary deduction is—

20

(3) If the accounting period falls within more than one financial year, the
30amount of the Northern Ireland supplementary deduction is
determined by taking the following steps.

Step 1

Calculate, for each financial year, the amount that would be the
Northern Ireland supplementary deduction for the accounting period
35if it fell within only that financial year (see subsection (2)).

Step 2

Multiply each amount calculated under step 1 by the proportion of the
accounting period that falls within the financial year for which it is
calculated.

40Step 3

Add together each amount found under step 2.

357UD Tax credit: Northern Ireland supplementary deduction ignored

For the purpose of determining the available loss of a company under
section 1217KA of CTA 2009 (amount of surrenderable loss) for any
45accounting period, any Northern Ireland supplementary deduction

made by the company in the period (and any Northern Ireland
supplementary deduction made in any previous accounting period) is
to be ignored.

357UE Transactions not entered into for genuine commercial reasons

5Section 1217LB of CTA 2009 (transactions not entered into for genuine
commercial reasons) has effect as if the reference in subsection (2)(a) to
an additional deduction under Part 15C of that Act included a reference
to a Northern Ireland supplementary deduction under this Chapter.

Use of losses

357UF 10 Restriction on use of losses before completion period

(1) Section 1217MA of CTA 2009 (restriction on use of losses before
completion period) has effect subject as follows.

(2) The reference in subsection (1) of that section to a loss made in the
separate theatrical trade in an accounting period preceding the
15completion period is, if the company is a Northern Ireland company in
that period, a reference to—

(a) any Northern Ireland losses of the trade of the period, or

(b) any mainstream losses of the trade of the period;

and references to losses in subsection (2) of that section are to be read
20accordingly.

(3) Subsection (4) applies if a Northern Ireland company has, in an
accounting period preceding the completion period—

(a) both Northern Ireland losses of the trade and mainstream
profits of the trade, or

(b) 25both mainstream losses of the trade and Northern Ireland
profits of the trade.

(4) The company may make a claim under section 37 (relief for trade losses
against total profits) for relief for the losses mentioned in subsection
(3)(a) or (b).

(5) 30But relief on such a claim is available only—

(a) in the case of a claim for relief for Northern Ireland losses,
against mainstream profits of the trade of the same period;

(b) in the case of a claim for relief for mainstream losses, against
Northern Ireland profits of the trade of the same period.

(6) 35In this section “the completion period” has the same meaning as in
section 1217MA of CTA 2009 (see section 1217M(2) of that Act).

357UG Use of losses in the completion period

(1) Section 1217MB of CTA 2009 (use of losses in the completion period)
has effect subject as follows.

(2) 40The reference in subsection (1) of that section to a loss made in the
separate theatrical trade is, in relation to a loss made in a period in
which the company is a Northern Ireland company, a reference to—

(a) any Northern Ireland losses of the trade of the period, or

(b) any mainstream losses of the trade of the period;

and references to losses in subsections (2) and (4) of that section are to
be read accordingly.

(3) The references in subsection (3) of that section to a loss made in the
separate theatrical trade in the completion period are, where the
5company is a Northern Ireland company in the period, references to—

(a) any Northern Ireland losses of the trade of the period, or

(b) any mainstream losses of the trade of the period;

and references to losses in subsection (4) of that section are to be read
accordingly.

(4) 10Subsection (4) of that section has effect, in relation to Northern Ireland
losses, as if the reference to an additional deduction under section
1217H of CTA 2009 included a reference to a Northern Ireland
supplementary deduction under this Chapter.

357UH Terminal losses

(1) 15Section 1217MC of CTA 2009 (terminal losses) has effect subject as
follows.

(2) Where—

(a) a company makes an election under subsection (2) of that
section (election to treat terminal loss as loss brought forward of
20different trade) in relation to all or part of a terminal loss, and

(b) the terminal loss is a Northern Ireland loss,

subsection (3) of that section has effect as if the reference in it to a loss
brought forward were to a Northern Ireland loss brought forward.

(3) Where—

(a) 25a company makes a claim under subsection (6) of that section
(claim to treat terminal loss as loss brought forward by different
company) in relation to part or all of a terminal loss, and

(b) the terminal loss is a Northern Ireland loss,

that subsection has effect as if the reference in it to a loss brought
30forward were to a Northern Ireland loss brought forward.

Provisional entitlement to relief

357UI Provisional entitlement to relief

Section 1217N(3) of CTA 2009 (provisional entitlement to relief:
definition of “the relieving provisions”) has effect as if the reference to
35section 1217H of CTA 2009 included section 357UB of this Act.

CHAPTER 15 Profits arising from the exploitation of patents etc

Introductory

357V Introductory

(1) This Chapter makes provision about the operation of Part 8A (profits
5arising from the exploitation of patents etc) in relation to an accounting
period in which a company is a Northern Ireland company.

(2) If a company—

(a) has made an election under section 357A (election for special
treatment of profits from patents etc) with respect to a trade of
10the company in relation to an accounting period, and

(b) is a Northern Ireland company in that period,

Part 8A has effect subject to the provisions of this Chapter.

(3) In this Chapter “the relevant period” means the accounting period
mentioned in subsection (2).

15Modification of deduction

357VA   Modification of section 357A

(1) Section 357A(2) has effect as if the reference to allowing a deduction to
be made in calculating for corporation tax purposes the profits of the
trade for the period were a reference to allowing a mainstream
20deduction and a Northern Ireland deduction to be made in accordance
with this section.

(2) The mainstream deduction is to be calculated in accordance with
section 357A(3), but as if in the formula in that provision “RP” referred
to the relevant mainstream IP profits of the trade.

(3) 25The relevant mainstream IP profits of the trade are so much of the
relevant IP profits of the trade of the company as are not by virtue of
section 357VB or 357VC relevant Northern Ireland IP profits of the
trade.

(4) The amount of the Northern Ireland deduction is—

30

(5) The Northern Ireland deduction is allowed only if in the relevant
period, or part of the relevant period, the Northern Ireland rate is
higher than the special IP rate of corporation tax.

(6) 40The mainstream deduction—

(a) is made in calculating for corporation tax purposes the profits
of the trade for the period, and

(b) is treated as forming part of the mainstream profits or
mainstream losses of the trade.

(7) 5The Northern Ireland deduction—

(a) is made in calculating for corporation tax purposes the profits
of the trade for the period, and

(b) is treated as forming part of the Northern Ireland profits or
Northern Ireland losses of the trade.

10“Relevant Northern Ireland IP profits”

357VB   Relevant Northern Ireland IP profits: SMEs

(1) This section applies if—

(a) the company is a Northern Ireland company in the relevant
period by virtue of the SME condition in section 357KA, and

(b) 15the trade is not an excluded trade.

(2)
The company’s “relevant Northern Ireland IP profits” are its relevant IP
profits of the trade for the period but—

(a) calculated without taking into account any amounts which
are—

(i) 20treated by section 747 of CTA 2009 as receipts or
expenses of the trade for the period, but

(ii) do not under section 357OA form part of the Northern
Ireland profits or Northern Ireland losses of the trade for
the period, and

(b) 25excluding so much of its relevant IP profits as are attributable to
a qualifying IP right or an exclusive licence in respect of a
qualifying IP right which (in either case) is held by the company
for the purposes of an excluded activity.

357VC   Relevant Northern Ireland IP profits: large companies

(1) 30This section applies if—

(a) the company is a Northern Ireland company in the relevant
period by virtue of the large company condition in section
357KA, and

(b) the trade is a qualifying trade by virtue of section 357KB(1)
35(trade other than excluded trade).

(2) The company has “relevant Northern Ireland IP profits” for the period
only if IP-related profits that (in accordance with Chapters 6 to 8) form
part of its Northern Ireland profits or Northern Ireland losses for the
period amount to Northern Ireland profits (rather than losses).

(3) 40The company’s “relevant Northern Ireland profits” for the period are
the appropriate proportion of the relevant IP profits.

(4) The “appropriate proportion” is—

(5) In this section the “IP-related profits” means the profits of the
5company’s trade for the accounting period attributable to—

(a) qualifying IP rights held by the company, or

(b) exclusive licences held by the company in respect of qualifying
IP rights.

Relevant IP losses

357VD 10 Relevant IP losses

(1) If any of the set-off provisions prevents section 357A from applying to
an amount of relevant IP profits of the trade of the company for the
relevant period, sections 357VA to 357VC have effect as if references to
the relevant IP profits of the trade were references to the relevant IP
15profits reduced by that amount.

(2) The “set-off provisions” are—

(a) subsection (3) of section 357EA (effect of set-off amount on
company with more than one trade),

(b) subsection (4) of section 357EB (allocation of set-off amount
20within a group), and

(c) subsection (3) of section 357EC (carry-forward of set-off
amount).

Interpretation

357VE   Interpretation of Chapter

25In this Chapter—

• “exclusive licence”, in relation to a right, has the same meaning as
  in Part 8A (see section 357BA);

• “qualifying IP right” has the same meaning as in Part 8A (see
  section 357B(4));

• 30“relevant IP profits”, in relation to the trade of a company, is to be
  read in accordance with Chapter 3 of Part 8A (but subject to
  section 357VD);

• “relevant period” has the meaning given by section 357V.

CHAPTER 16 Northern Ireland profits and losses etc: partnerships

357W 35Introductory

(1) This Chapter makes provision under which profits or losses of a trade
carried on by a company as a partner in a Northern Ireland firm are—

(a) Northern Ireland profits or losses of the trade,

(b) mainstream profits or losses of the trade, or

(c) 40a combination of—

(i) profits or losses within paragraph (a), and

(ii) profits or losses within paragraph (b).

(2) This Chapter has effect for the purposes of this Part.

(3) In this Chapter “firm” has the same meaning as in CTA 2009 (see section
1257(1) of that Act).

357WA 5 Meaning of “Northern Ireland firm”

(1) A firm is a “Northern Ireland firm” in an accounting period of the firm
(“the firm’s accounting period”) if—

(a) the firm carries on a qualifying partnership trade in the period,
and

(b) 10the SME partnership condition or the large partnership
condition is met.

(2) The “SME partnership condition” is that the firm—

(a) is an SME in relation to the firm’s accounting period, and

(b) is a Northern Ireland employer in relation to that period.

(3) 15The “large partnership condition” is that the firm—

(a) is not an SME in relation to the firm’s accounting period, and

(b) has a NIRE in that period.

(4) In their application to subsections (2) and (3), the provisions mentioned
in subsection (5) have effect as if—

(a) 20references to a company were to a firm, and

(b) references to a director of a company were omitted.

(5) The provisions are—

(a) section 357KC (meaning of “SME”);

(b) section 357KD (meaning of “Northern Ireland employer”);

(c) 25section 357KE (Northern Ireland workforce conditions);

(d) Chapter 5 (Northern Ireland regional establishments);

(e) section 1128 of CTA 2009 (meaning of “externally provided
worker”).

(6) A reference in this Chapter, in relation to a Northern Ireland firm, to
30“the firm’s trade” is to the trade mentioned in subsection (1).

357WB Meaning of “qualifying partnership trade”

(1) “Qualifying partnership trade” means a trade carried on by a firm
where the trade is not an excluded trade.

(2) If an election by a firm for the purposes of this subsection has effect,
35“qualifying partnership trade” also includes a trade carried on by the
firm where—

(a) the trade is an excluded trade within—

(i) section 357XB (lending and investment),

(ii) section 357XC (investment management), or

(iii) 40section 357XE (re-insurance trade), and

(b) the trade includes any back-office activities.

(3) An election for the purposes of subsection (2)—

(a) must be made by notice to an officer of Revenue and Customs,