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Corporation Tax Act 2009

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

  • 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 3U.K.Trade profits: basic rules

46Generally accepted accounting practiceU.K.

(1)The profits of a trade must be calculated in accordance with generally accepted accounting practice, subject to any adjustment required or authorised by law in calculating profits for corporation tax purposes.

(2)This does not—

(a)require a company to comply with the requirements of the Companies Act 2006 (c. 46) or subordinate legislation made under that Act except as to the basis of calculation, or

(b)impose any requirements as to audit or disclosure.

(3)This section does not affect any provisions of the Corporation Tax Acts—

(a)relating to the calculation of the profits of—

(i)Lloyd's underwriters, F1...

F1(ii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)otherwise laying down special rules for the calculation of the profits of a particular description of business.

Textual Amendments

F1S. 46(3)(a)(ii) and the word immediately preceding it omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 16 para. 142

47Losses calculated on same basis as profitsU.K.

(1)The same rules apply for corporation tax purposes in calculating losses of a trade as apply in calculating profits.

(2)This is subject to any express provision to the contrary.

48Receipts and expensesU.K.

(1)In the Corporation Tax Acts, in the context of the calculation of the profits of a trade, references to receipts and expenses are to any items brought into account as credits or debits in calculating the profits.

(2)It follows that references in that context to receipts or expenses do not imply that an amount has actually been received or paid.

(3)This section is subject to any express provision to the contrary.

49Items treated as receipts and expensesU.K.

The rules for calculating the profits of a trade need to be read with—

(a)the provisions of CAA 2001 which treat allowances as expenses of a trade,

(b)the provisions of CAA 2001 which treat charges as receipts of a trade,

(c)section 297 (credits and debits in respect of a loan relationship to which a company is a party for the purposes of a trade it carries on treated as receipts and expenses of the trade),

(d)section 573 (credits and debits in respect of a derivative contract to which a company is a party for the purposes of a trade it carries on treated as receipts and expenses of the trade),

(e)section 747 (credits and debits in respect of an intangible fixed asset held by a company for the purposes of a trade it carries on treated as receipts and expenses of the trade), and

(f)section 749 (credits and debits in respect of an intangible fixed asset held by a company for the purposes of a section 39(4) concern which it carries on treated as receipts and expenses of the concern).

50Animals kept for trade purposesU.K.

(1)Animals or other living creatures kept for the purposes of a trade are treated as trading stock if they are not kept wholly or mainly—

(a)for the work they do in connection with the carrying on of the trade,

(b)for public exhibition, or

(c)for racing or other competitive purposes.

(2)But they are not treated as trading stock if they are part of a herd in relation to which a herd basis election has effect (see Chapter 8).

(3)This section applies to shares in animals or other living creatures as it applies to the creatures themselves.

51Relationship between rules prohibiting and allowing deductionsU.K.

(1)Any relevant permissive rule in this Part—

(a)has priority over any relevant prohibitive rule, but

(b)is subject to—

(i)section 56 (car F2... hire),

(ii)section 1288 (unpaid remuneration),

(iii)section 1290 (employee benefit contributions),

(iv)section 1304 (crime-related payments).

[F3(1A)But, if the relevant permissive rule would allow a deduction in calculating the profits of a trade in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—

(a)does not have priority under subsection (1)(a), and

(b)is subject to any relevant prohibitive rule (and to the provisions mentioned in subsection (1)(b)).]

(2)In this section “any relevant permissive rule in this Part” means any provision of—

(a)Chapter 5 (trade profits: rules allowing deductions), apart from sections 62 to 67,

(b)Chapter 7 (trade profits: gifts to charities etc),

(c)Chapter 9 (trade profits: other specific trades), or

(d)Chapter 12 (deductions from profits: unremittable amounts),

which allows a deduction in calculating the profits of a trade.

(3)In this section “any relevant prohibitive rule”, in relation to any deduction, means any provision of this Part or Chapter 1 of Part 20 (apart from those mentioned in subsection (1)(b)) which might otherwise be read as—

(a)prohibiting or deferring the deduction, or

(b)restricting the amount of the deduction.

[F4(4)In this section “relevant tax avoidance arrangements” means arrangements—

(a)to which the company carrying on the trade is a party, and

(b)the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).

Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).]

Textual Amendments

F2Words in s. 51(1)(b)(i) omitted (with effect in accordance with Sch. 11 paras. 65-67 of the commencing Act) by virtue of Finance Act 2009 (c. 10), Sch. 11 para. 46

F3S. 51(1A) inserted (with effect in accordance with s. 78(5)-(7) of the amending Act) by Finance Act 2013 (c. 29), s. 78(3)(a)

F4S. 51(4) inserted (with effect in accordance with s. 78(5)-(7) of the amending Act) by Finance Act 2013 (c. 29), s. 78(3)(b)

52Apportionment etc of profits and losses to accounting periodU.K.

(1)This section applies if a period of account of a trade does not coincide with an accounting period.

(2)Any of the following steps may be taken if they are necessary in order to arrive at the profits or losses of the accounting period—

(a)apportioning the profits or losses of a period of account to the parts of that period falling in different accounting periods, and

(b)adding the profits or losses of a period of account (or part of a period) to profits or losses of other periods of account (or parts).

(3)The steps must be taken by reference to the number of days in the periods concerned.

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