Corporation Tax (Northern Ireland) Bill (HC Bill 170)

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,