|
| |
| |
(2) | The claim has effect only if it relates to an amount equal to the lesser of— |
| |
(a) | so much of the deficit as is not an amount in relation to which a claim |
| |
is made under section 459(1)(a), and |
| |
(b) | the total amount of the profits available for relief under this section. |
| |
(3) | Section 463 explains which profits are so available. |
| 5 |
(4) | The amount to which the claim relates is set off against those profits by treating |
| |
them as reduced accordingly. |
| |
(5) | If those profits are profits for more than one accounting period, the relief is |
| |
applied by setting off the amount to which the claim relates against profits for |
| |
a later period before setting off any remainder of that amount against profits |
| 10 |
| |
463 | Profits available for relief under section 462 |
| |
(1) | The profits available for relief under section 462 are the amounts which (apart |
| |
from the relief) would be charged under this Part as profits for accounting |
| |
periods ending within the permitted period, after giving every prior relief. |
| 15 |
| |
“the permitted period” means the period of 12 months immediately |
| |
before the deficit period, and |
| |
“prior relief” means a relief which subsection (5) provides must be given |
| |
before relief under section 462. |
| 20 |
(3) | If an accounting period ending within the permitted period begins before it, |
| |
only a part of the amount which (apart from the relief) would be chargeable |
| |
under this Part for that period, after giving every prior relief, is available for |
| |
relief under section 462. |
| |
(4) | That part is so much as is proportionate to the part of the accounting period in |
| 25 |
| |
(5) | The reliefs which must be given before relief under section 462 are— |
| |
(a) | relief as a result of a claim under section 459(1)(a) (claim for deficit to |
| |
be set off against total profits for the deficit period), |
| |
(b) | relief in respect of a loss or deficit incurred or treated as incurred in an |
| 30 |
accounting period before the deficit period, |
| |
(c) | relief under section 338 of ICTA (charges on income deducted from |
| |
total profits) in respect of payments made wholly and exclusively for |
| |
| |
(d) | relief under section 393A of ICTA (losses set off against profits of the |
| 35 |
same, or an earlier, accounting period), and |
| |
(e) | if the company is a company with investment business for the purposes |
| |
of Part 16 (companies with investment business)— |
| |
(i) | any deduction in respect of management expenses under |
| |
section 1219 (expenses of management of a company’s |
| 40 |
| |
(ii) | relief under section 338 of ICTA in respect of payments made |
| |
wholly and exclusively for the purposes of its business, and |
| |
(iii) | any allowance under Part 2 of CAA 2001 (plant and machinery |
| |
| 45 |
| |
| |
|
| |
| |
| |
| |
464 | Priority of this Part for corporation tax purposes |
| |
(1) | The amounts which are brought into account in accordance with this Part in |
| |
respect of any matter are the only amounts which may be brought into account |
| 5 |
for corporation tax purposes in respect of it. |
| |
(2) | Subsection (1) is subject to any express provision to the contrary. |
| |
(3) | For such provisions, see in particular— |
| |
| |
| 10 |
(b) | section 465 (exclusion of distributions except in tax avoidance cases), |
| |
(c) | section 700 (relationship of Part 7 to this Part), |
| |
(d) | section 400(9A) of ICTA (write-off of government investment), |
| |
(e) | section 494 of ICTA (petroleum extraction activities: loan |
| |
| 15 |
(f) | section 795(4) of ICTA (computation of income subject to foreign tax), |
| |
(g) | section 811(3) of ICTA (deduction for foreign tax where no credit |
| |
| |
(h) | section 83(2ZA) of FA 1989 (life assurance: receipts to be taken into |
| |
| 20 |
(i) | paragraph 3(5) of Schedule 12 to F(No.2)A 1992 (banks etc in |
| |
compulsory liquidation: taxation of certain receipts). |
| |
(4) | See also the following sections (under which amounts prevented from being |
| |
brought into account under this Part are treated as if they were so brought into |
| |
account for the purposes of this section)— |
| 25 |
(a) | section 327(5) and (6) (disallowance of imported losses etc), and |
| |
(b) | section 441(4) and (5) (loan relationships for unallowable purposes). |
| |
465 | Exclusion of distributions except in tax avoidance cases |
| |
(1) | Credits or debits relating to any amount falling, when paid, to be treated as a |
| |
distribution must not be brought into account for the purposes of this Part, |
| 30 |
except, in the case of credits, so far as they are avoidance arrangement amounts |
| |
| |
(2) | Accordingly, amounts prevented from being brought into account under |
| |
subsection (1) may be brought into account for corporation tax purposes |
| |
otherwise than under this Part. |
| 35 |
(3) | But see the following provisions (under which some amounts are prevented |
| |
from being distributions for corporation tax purposes and accordingly are |
| |
| |
(a) | section 523(2)(b) (shares subject to outstanding third party obligations |
| |
and non-qualifying shares), |
| 40 |
(b) | section 209(6A) of ICTA (relevant alternative finance return under |
| |
alternative finance arrangements), |
| |
(c) | section 477A(3)(b) of ICTA (building society dividends etc), and |
| |
| |
| |
|
| |
| |
(d) | section 486(1) and (9) of ICTA (dividends, bonuses and other sums |
| |
payable to shareholders in registered industrial and provident societies |
| |
and UK agricultural or fishing co-operatives). |
| |
(4) | For the purposes of this section an amount is an avoidance arrangement |
| |
amount if it arises in consequence of, or otherwise in connection with, |
| 5 |
arrangements of which the purpose, or one of the main purposes, is securing a |
| |
tax advantage for any person. |
| |
(5) | In this section “arrangements” includes any scheme, agreement or |
| |
understanding, transaction or series of transactions. |
| |
| 10 |
General and supplementary provisions |
| |
Connections between persons |
| |
466 | Companies connected for an accounting period |
| |
(1) | This section and sections 467 to 471 have effect for the purposes of any |
| |
provisions of this Part which apply this section (but this does not affect the |
| 15 |
application of section 1316(1) (meaning of “connected” persons) for other |
| |
| |
(2) | There is a connection between a company (“A”) and another company (“B”) for |
| |
an accounting period if there is a time in the period when— |
| |
| 20 |
| |
(c) | A and B are both controlled by the same company. |
| |
(3) | But A and B are not taken to be controlled by the same company just because |
| |
they have been under the control of— |
| |
| 25 |
(b) | a Minister of the Crown, |
| |
(c) | a government department, |
| |
(d) | a Northern Ireland department, |
| |
(e) | a foreign sovereign power, or |
| |
(f) | an international organisation. |
| 30 |
(4) | Subsection (2) is subject to section 468 (connection between companies to be |
| |
ignored in some circumstances). |
| |
(5) | For a case where companies are treated as if one controlled the other, see |
| |
section 383(5) (inter-partnership lending between connected company |
| |
| 35 |
(6) | Section 472 (meaning of “control”) applies for the purposes of this section. |
| |
467 | Connections where partnerships are involved |
| |
(1) | This section applies for the purposes of the provisions which apply section 466 |
| |
(“the relevant provisions”) if— |
| |
(a) | a trade or business is carried on by a firm, and |
| 40 |
| |
| |
|
| |
| |
(b) | the firm stands in the position of a creditor or debtor as respects a |
| |
| |
(2) | The questions about connections specified in subsection (3) must be |
| |
determined as if each of the partners in the firm separately (rather than the |
| |
firm), stood in that position as respects the debt to the extent of that partner’s |
| 5 |
| |
| |
(a) | whether for the purposes of this Part there is a connection for the |
| |
purposes of the relevant provisions between any two companies for an |
| |
accounting period in the case of a loan relationship, and |
| 10 |
(b) | how far any amount is treated under this Part in any particular way as |
| |
a result of there being, or not being, such a connection. |
| |
(4) | For the purposes of subsection (2), a partner’s “appropriate share” is the same |
| |
share as the share in which any profit or loss for the accounting period in |
| |
question would be apportioned to the partner in accordance with the firm’s |
| 15 |
profit-sharing arrangements. |
| |
(5) | The references in subsections (2) to (4) to partners do not include references to |
| |
the general partner of a limited partnership which is a collective investment |
| |
| |
468 | Connection between companies to be ignored in some circumstances |
| 20 |
(1) | In the case of a company (“the creditor”) which has a creditor relationship, any |
| |
connection for an accounting period between the creditor and another |
| |
company which stands in the position of a debtor as respects the debt is |
| |
ignored for the purposes of the relevant provisions if the creditor is a party to |
| |
the relationship in circumstances where— |
| 25 |
(a) | conditions A to E in section 469 (creditors who are financial traders) are |
| |
| |
(b) | conditions A, B and C in section 471 (creditors who are insurance |
| |
companies carrying on basic life assurance and general annuity |
| |
| 30 |
(2) | In subsection (1) “the relevant provisions” means any provisions of this Part |
| |
| |
(3) | Subsection (4) applies if for any accounting period subsection (1) has effect in |
| |
the case of a creditor relationship of a company. |
| |
(4) | Subsection (1) does not apply for determining whether there is a connection |
| 35 |
between the two companies for the purposes of so much of any of the relevant |
| |
provisions or of section 467 as relates to the corresponding debtor relationship. |
| |
(5) | For the purposes of this section and section 469, a company is treated as |
| |
standing in the position of a debtor if it indirectly stands in that position by |
| |
reference to a series of loan relationships or relevant money debts. |
| 40 |
(6) | In subsection (5) “relevant money debt” means a money debt which would be |
| |
a loan relationship if a company directly stood in the position of creditor or |
| |
| |
| |
| |
|
