Corporation Tax Act 2010 (c. 4)

Part 5 U.K. Group relief

Modifications etc. (not altering text)

C1 Pt. 5 applied (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 125 (with s. 147, Sch. 17)

C2 Pt. 5 excluded (with effect in accordance with Sch. 18 para. 63 of the amending Act) by Finance Act 2016 (c. 24), Sch. 18 para. 20(5)

C3 Pt. 5 modified by 2009 c. 4, s. 1218ZDB(2) (as inserted (for specified purposes and with effect in accordance with Sch. 6 paras. 20, 21(1)(a) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 6 para. 1 (with Sch. 6 para. 21(3)))

Chapter 3 U.K. Surrenders made by non-UK resident company resident or trading in the EEA

Other rules, assumptions and exclusions U.K.

122 Assumptions to be made in recalculating EEA amount U.K.

Sections 123 to 126 apply for the purpose of recalculating the EEA amount at Step 3 in section 113.

123 Assumptions as to UK residence U.K.

(1) Assume that the surrendering company is UK resident throughout the EEA accounting period.

(2) But this does not require it to be assumed—

(a) that there is any change in the place or places at which the surrendering company carries on its activities (although see section 124), or

(b) that the surrendering company ceases to be UK resident at the end of the EEA accounting period.

(3) Assume that the surrendering company becomes UK resident (and, therefore, within the charge to corporation tax) at the beginning of the EEA accounting period.

124 Assumptions as to places in which activities carried on U.K.

(1) If during the EEA accounting period the surrendering company carries on a trade wholly or partly in the relevant EEA territory, assume that the trade is carried on wholly or partly in the United Kingdom.

(2) If the surrendering company holds any estate, interest or rights in or over land in the relevant EEA territory, assume that the land is in the United Kingdom.

(3) For the purposes of subsection (2) the reference to holding an estate, interest or rights in or over land in the relevant EEA territory is to be read so as to produce the result that most closely corresponds with that produced by applying those concepts of law in relation to a UK property business or land in the United Kingdom.

(4) In this section “the relevant EEA territory” means—

(a) the EEA territory in which the surrendering company is resident, or

(b) (as the case may be) the EEA territory in which the surrendering company carries on a trade through a permanent establishment.

125 Assumptions as to accounting periods U.K.

(1) Assume that an accounting period of the surrendering company begins at the beginning of the EEA accounting period.

(2) Assume that the accounting period ends—

(a) when the EEA accounting period ends, or

(b) if earlier, at the end of 12 months.

(3) If the accounting period ends before the end of the EEA accounting period, assume that a further accounting period then begins and so on until the EEA accounting period ends.

(4) Assume that any further accounting period ends—

(a) at the end of 12 months, or

(b) if earlier, when the EEA accounting period ends.

126 Assumptions in relation to capital allowances U.K.

(1) This section applies if, before the EEA accounting period, the surrendering company incurs capital expenditure on the provision of plant or machinery for the purposes of any activity.

(2) For the purposes of Part 2 of CAA 2001 assume that the plant or machinery—

(a) was provided for purposes wholly other than those of the activity, and

(b) was not brought into use for the purposes of the activity until the beginning of the EEA accounting period,

and section 13 of CAA 2001 is to apply accordingly.

(3) This section is to be read as if contained in Part 2 of CAA 2001.

127 Amounts excluded because of certain arrangements U.K.

(1) An amount (or part of an amount) resulting from Step 4 in section 113 is excluded if—

(a) it is not attributable for corporation tax purposes to any permanent establishment through which the surrendering company carries on a trade in the United Kingdom, and

(b) the following condition is met.

(2) The condition is that the amount (or part)—

(a) would not have resulted from Step 4 but for any arrangements within subsection (3), or

(b) would not have arisen to the surrendering company but for any such arrangements.

(3) Arrangements are within this subsection if their main purpose, or one of their main purposes, is to secure that the amount (or part) may be surrendered for the purposes of group relief.

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

128 Rules for recalculating EEA amount U.K.

(1) For the purposes of Step 3 in section 113 the EEA amount is to be recalculated in accordance with any provision made by or under the Corporation Tax Acts—

(a) that applies for the purpose of calculating for corporation tax purposes losses or other amounts to which the EEA amount corresponds, or

(b) that otherwise affects in any way the amount of those losses or other amounts that is eligible for corporation tax relief.

(2) For the purposes of subsection (1) the Treasury may by regulations provide for the modification of any provision made by or under the Corporation Tax Acts—

(a) that applies as mentioned in subsection (1)(a), or

(b) that otherwise affects an amount as mentioned in subsection (1)(b).

(3) Regulations under subsection (2) may make provision in relation to—

(a) all classes of trade or business, or

(b) any particular class or classes of trade or business.

(4) Regulations under subsection (2) may—

(a) make different provision for different cases or different purposes,

(b) contain incidental, supplemental, consequential and transitional provision and savings, and

(c) make provision having retrospective effect.