Finance Act 2009

Balancing payments between group companies: no charge to, or relief from, tax

39 (1) This paragraph applies where—

(a) one or more financing income amounts of a company (“company A”) for the relevant period of account are—

(i) by virtue of paragraph 34, not brought into account, or

(ii) by virtue of paragraph 37, reduced,

(b) one or more financing expense amounts of another company (“company B”) for the relevant period of account are—

(i) by virtue of paragraph 22, not brought into account, or

(ii) by virtue of paragraph 25, reduced,

(c) company A makes one or more payments (“the balancing payments”) to company B, and

(d) the sole or main reason for making the balancing payments is that the conditions in paragraphs (a) and (b) are met.

(2) To the extent that the sum of the balancing payments does not exceed the amount specified in sub-paragraph (3), those payments—

(a) are not to be taken into account in computing profits or losses of either company A or company B for the purposes of corporation tax, and

(b) are not to be regarded as distributions for any of the purposes of the Corporation Tax Acts.

(3) The amount referred to in sub-paragraph (2) is the lower of—

(a) the sum of the financing income amounts mentioned in sub-paragraph (1)(a), and

(b) the sum of the financing expense amounts mentioned in sub-paragraph (1)(b).