Search Legislation

Corporation Tax Act 2009

Changes over time for: Chapter 14

 Help about opening options

Changes to legislation:

There are outstanding changes not yet made by the legislation.gov.uk editorial team to Corporation Tax Act 2009. Any changes that have already been made by the team appear in the content and are referenced with annotations. Help about Changes to Legislation

Close

Changes to Legislation

Revised legislation carried on this site may not be fully up to date. Changes and effects are recorded by our editorial team in lists which can be found in the ‘Changes to Legislation’ area. Where those effects have yet to be applied to the text of the legislation by the editorial team they are also listed alongside the legislation in the affected provisions. Use the ‘more’ link to open the changes and effects relevant to the provision you are viewing.

View outstanding changes

Changes and effects yet to be applied to Part 3 Chapter 14:

  • S 1217N(3) modified by 2010 c. 4 s. 357UI (as inserted) by 2015 c. 21 s. 1

Changes and effects yet to be applied to the whole Act associated Parts and Chapters:

Whole provisions yet to be inserted into this Act (including any effects on those provisions):

Chapter 14U.K.Adjustment on change of basis

Adjustment on change of basisU.K.

180Application of ChapterU.K.

(1)This Chapter applies if—

(a)a company carrying on a trade changes, from one period of account to the next, the basis on which profits of the trade are calculated for corporation tax purposes,

(b)the old basis accorded with the law or practice applicable in relation to the period of account before the change, and

(c)the new basis accords with the law and practice applicable in relation to the period of account after the change.

(2)The practice applicable in any case means the accepted practice in cases of that description as to how profits of a trade should be calculated for corporation tax purposes.

(3)A company changes the basis on which profits of a trade are calculated for corporation tax purposes if the company makes—

(a)a [F1change of accounting policy] (see subsection (4)), or

(b)a change in the tax adjustments applied (see subsections (5) and (6)).

[F2(4)A “change of accounting policy” includes, in particular—

(a)a change from using UK generally accepted accounting practice to using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards, and

(b)a change from using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards to using UK generally accepted accounting practice.]

(5)A “tax adjustment” means any adjustment required or authorised by law in calculating profits of a trade for corporation tax purposes.

(6)A “change in the tax adjustments applied”—

(a)does not include a change made in order to comply with amending legislation not applicable to the previous period of account, but

(b)includes a change resulting from a change of view as to what is required or authorised by law or as to whether any adjustment is so required or authorised.

Textual Amendments

F1Words in s. 180(3)(a) substituted (with effect in accordance with s. 54(5)(6) of the amending Act) by Finance Act 2012 (c. 14), s. 54(2)(a)

F2S. 180(4) substituted (with effect in accordance with s. 54(5)(6) of the amending Act) by Finance Act 2012 (c. 14), s. 54(2)(b)

181Giving effect to positive and negative adjustmentsU.K.

(1)An amount by way of adjustment must be calculated in accordance with section 182.

(2)If the amount produced by the calculation is positive—

(a)the amount is brought into account as a receipt in calculating the profits of the trade, and

(b)the receipt is treated as arising on the first day of the first period of account for which the new basis is adopted.

(3)If the amount produced by the calculation is negative—

(a)a deduction is allowed for the amount as an expense of the trade in calculating the profits of the trade, and

(b)the expense is treated as arising on the first day of the first period of account for which the new basis is adopted.

(4)This section is subject to—

(a)section 183 (no adjustment for certain expenses previously brought into account),

(b)section 184 (cases where adjustment not required until assets realised or written off), and

(c)section 185 (change from realisation basis to mark to market).

182Calculation of the adjustmentU.K.

The amount of the adjustment is calculated as follows. Step 1

Add together any amounts representing the extent to which, comparing the two bases, profits were understated (or losses overstated) on the old basis.

The amounts are—

Amounts
1Receipts which on the new basis would have been brought into account in calculating the profits of a period of account before the change, so far as they were not so brought into account.
2Expenses which on the new basis fall to be brought into account in calculating the profits of a period of account after the change, so far as they were brought into account in calculating the profits of a period of account before the change.
3

Deductions in respect of opening trading stock or opening work in progress in the first period of account on the new basis, so far as they—

(a)

are not matched by credits in respect of closing trading stock or closing work in progress in the last period of account before the change, or

(b)

are calculated on a different basis that if used to calculate those credits would have given a higher figure.

4Amounts recognised for accounting purposes in respect of depreciation in the last period of account before the change, so far as they were not the subject of an adjustment for corporation tax purposes, where such an adjustment would be required on the new basis.

Step 2

Then deduct any amounts representing the extent to which, comparing the two bases, profits were overstated (or losses understated) on the old basis.

The amounts are—

Amounts
1Receipts which were brought into account in a period of account before the change, so far as they would not have been so brought into account if the profits had been calculated on the new basis.
2

Expenses which were not brought into account in calculating the profits of a period of account before the change, so far as they—

(a)

would have been brought into account for a period of account before the change if the profits had been calculated on the new basis, and

(b)

would have been brought into account for a period of account after the change if the profits had continued to be calculated on the old basis.

3

Credits in respect of closing trading stock or closing work in progress in the last period of account before the change, so far as they—

(a)

are not matched by deductions in respect of opening trading stock or opening work in progress in the first period of account on the new basis, or

(b)

are calculated on a different basis that if used to calculate those deductions would have given a lower figure.

An amount so deducted may not be deducted again in calculating the profits of a period of account.

Expenses previously brought into accountU.K.

183No adjustment for certain expenses previously brought into accountU.K.

(1)This section applies if, as a result of a change of basis, expenses brought into account before the change on the old basis would on the new basis be brought into account over more than one period of account after the change.

(2)In such a case—

(a)no adjustment is made under this Chapter, and

(b)in calculating the profits of the trade no deduction is allowed for the expenses for any period of account after the change.

Realising or writing off assetsU.K.

184Cases where adjustment not required until assets realised or written offU.K.

(1)This section applies if there is a change of basis resulting from a tax adjustment affecting the calculation of any of the following amounts.

(2)The amounts are—

(a)any amount brought into account in respect of closing trading stock in the last period of account before the change of basis,

(b)any amount brought into account in respect of opening trading stock in the first period of account on the new basis, and

(c)any amount brought into account in respect of depreciation.

(3)The receipt of the trade or (as the case may be) the expense of the trade is treated as arising only when the asset to which it relates is realised or written off.

Mark to marketU.K.

185Change from realisation basis to mark to marketU.K.

(1)This section applies if there is a change of basis from—

(a)not recognising a profit or loss on an asset until the asset is realised, to

(b)bringing assets into account in each period of account at a fair value.

(2)So far as—

(a)a receipt within item 1 of Step 1 in section 182 represents the fair value of an asset that is trading stock, or

(b)an expense within item 2 of that step relates to such an asset,

the receipt of the trade or (as the case may be) the expense of the trade is treated as not arising until the period of account in which the value of the asset is realised.

(3)In the case of a receipt of the trade, this is subject to any election under section 186 (election for spreading).

(4)In this section “trading stock” has the same meaning as in section 163.

186Election for spreading if section 185 appliesU.K.

(1)If section 185 applies, the company carrying on the trade may elect for any receipt treated as arising under this Chapter to be spread over 6 periods of account.

(2)The election must be made within 12 months of the end of the first accounting period to which the new basis applies.

(3)If an election is made, an amount equal to one-sixth of the amount of the receipt—

(a)is treated as arising, and

(b)is brought into account in calculating the profits of the trade,

in each of the 6 periods of account beginning with the first period to which the new basis applies.

(4)But if, before the whole of the receipt has been so brought into account, the company permanently ceases to carry on the trade, the whole of the amount so far as not previously brought into account—

(a)is treated as arising, and

(b)is brought into account in calculating the profits of the trade,

immediately before the cessation.

187Transfer of insurance businessU.K.

(1)This section applies if—

(a)an asset to which section 185 or 186 applies is transferred from one insurance company to another,

(b)the transfer is made under an insurance business transfer scheme, and

(c)immediately after the transfer, the transferee is UK resident or the asset is held for the purposes of a business carried on by the transferee in the United Kingdom through a permanent establishment.

(2)For the purposes of section 185, the asset is not to be treated as realised by the transferor merely because of its transfer under the scheme.

(3)If the transfer is of the transferor's whole business, the transferee is responsible under section 185 or 186 for bringing into account any amount required to be brought into account after the transfer.

Back to top

Options/Help

Print Options

You have chosen to open The Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act as a PDF

The Whole Act you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open The Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act without Schedules as a PDF

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open The Whole Part

The Whole Part you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Part as a PDF

The Whole Part you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open the Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open the Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open Schedules only

The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

Close

Legislation is available in different versions:

Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.

Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.

Close

See additional information alongside the content

Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.

Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.

Close

Opening Options

Different options to open legislation in order to view more content on screen at once

Close

Explanatory Notes

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.

Close

More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources
Close

Timeline of Changes

This timeline shows the different points in time where a change occurred. The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. The first date in the timeline will usually be the earliest date when the provision came into force. In some cases the first date is 01/02/1991 (or for Northern Ireland legislation 01/01/2006). This date is our basedate. No versions before this date are available. For further information see the Editorial Practice Guide and Glossary under Help.

Close

More Resources

Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • correction slips

Click 'View More' or select 'More Resources' tab for additional information including:

  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • links to related legislation and further information resources