Taxation (International and Other Provisions) Act 2010

CHAPTER 9 U.K. “Available amount”

332 The available amount U.K.

(1) References in this Part to the “available amount” for a period of account of the worldwide group are to the sum of the amounts disclosed in the financial statements of the group for that period in respect of—

(a) interest payable on [F1 borrowing],

(b) amortisation of discounts relating to [F2 borrowing],

(c) amortisation of premiums relating to [F3 borrowing],

(d) amortisation of [F4 expenses ancillary to borrowing],

(e) the financing [F5 expense] implicit in payments made under finance leases,

(f) the financing [F6 expense] relating to debt factoring, or

(g) matters of such other description as may be specified in regulations made by the Commissioners.

[F7 (1A) For the purposes of this section, expenses are “ancillary” to borrowing if and only if they are incurred directly—

(a) in bringing borrowing into existence or in altering its terms, or

(b) in making payments in respect of borrowing.

(1B) Where—

(a) a member of the group incurs expenses for the purpose of bringing borrowing into existence but the borrowing is not brought into existence, or

(b) a member of the group incurs expenses for the purpose of altering the terms of borrowing but the terms are not altered,

the expenses are treated as falling within subsection (1A)(a) to the same extent as if the borrowing had been brought into existence or the terms had been altered.]

(2) An amount that falls within any of paragraphs (a) to (g) of subsection (1) is to be disregarded for the purposes of that subsection to the extent that—

(a) the amount represents a dividend payable in respect of preference shares, and

(b) those shares are recognised as a liability in the financial statements of the group for the period.

Textual Amendments

F1 Word in s. 332(1)(a) substituted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 26(2)(a), 36(1)

F2 Word in s. 332(1)(b) substituted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 26(2)(a), 36(1)

F3 Word in s. 332(1)(c) substituted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 26(2)(a), 36(1)

F4 Words in s. 332(1)(d) substituted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 26(2)(b), 36(1)

F5 Word in s. 332(1)(e) substituted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 26(2)(c), 36(1)

F6 Word in s. 332(1)(f) substituted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 26(2)(c), 36(1)

F7 S. 332(1A)(1B) inserted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 26(3), 36(1)

[F8 332A Groups containing securitisation companies U.K.

(1) This section applies where a member of the worldwide group is a securitisation company within the meaning of section 83(2) of FA 2005 or section 623 of CTA 2010 at any time during a period of account of the worldwide group.

(2) The reference in section 332(1) to amounts disclosed in the financial statements of the worldwide group for the period are to the amounts that would have been disclosed in those statements had they been prepared on the assumption that the company mentioned in subsection (1) was not a member of the worldwide group.

Textual Amendments

F8 Ss. 332A-332C inserted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 27, 36(1)

332B Partnerships: expenses of borrowing U.K.

(1) This section applies where—

(a) a member of the worldwide group is a member of a partnership at any time during a period of account of the worldwide group, and

(b) at any time during the period of account, a liability of the partnership in respect of borrowing (“the partnership liability”) is outstanding.

(2) For the purposes mentioned in subsection (7), the financial statements of the worldwide group for the period of account are to be treated as if—

(a) they did not disclose any amounts falling within section 332(1)(a) to (d) relating to the partnership liability, and

(b) they disclosed instead such amounts as would have fallen within that provision had the financial statements been prepared on the following two assumptions.

(3) The first assumption is that, at each time during the period of account at which the partnership liability was outstanding, each member of the partnership owed the appropriate proportion of the partnership liability to the same person, and on the same terms, as it was in fact owed by the partnership.

(4) In subsection (3) “ the appropriate proportion ”, in relation to a member of the partnership at any time, is the proportion of the partnership's profits to which the member is entitled at that time under the partnership's profit sharing arrangements.

(5) The second assumption is that, during the period of account, each member of the partnership incurred the appropriate proportion of any expenses relating to the partnership liability.

(6) In subsection (5) “ the appropriate proportion ” in relation to a member of the partnership, is the proportion of the partnership's profits to which the member is entitled, over the period of account of the worldwide group, under the partnership's profit sharing arrangements.

(7) The purposes referred to in subsection (2) are the purposes of—

(a) this Chapter, and

(b) any other provision of the Corporation Tax Acts so far as it applies for the purposes of this Chapter.

Textual Amendments

F8 Ss. 332A-332C inserted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 27, 36(1)

332C Partnerships: other expenses U.K.

(1) This section applies where—

(a) a member of the worldwide group is a member of a partnership at any time during a period of account of the worldwide group, and

(b) during the period of account, the partnership incurs expenses in relation to finance leases or debt factoring (“the relevant partnership expenses”).

(2) For the purposes mentioned in subsection (5), the financial statements of the worldwide group for the period of account are to be treated as if—

(a) they did not disclose any of the relevant partnership expenses, and

(b) they disclosed instead such amounts as would have fallen within section 332(1)(e) or (f), had the financial statements been prepared on the following assumption.

(3) The assumption is that, during the period of account, each member of the partnership incurred the appropriate proportion of the relevant partnership expenses.

(4) In subsection (3) “ the appropriate proportion ”, in relation to a member of the partnership, is the proportion of the partnership's profits to which the member is entitled, over the period of account of the worldwide group, under the partnership's profit sharing arrangements.

(5) The purposes referred to in subsection (2) are the purposes of—

(a) this Chapter, and

(b) any other provision of the Corporation Tax Acts so far as it applies for the purposes of this Chapter.]

Textual Amendments

F8 Ss. 332A-332C inserted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 27, 36(1)

333 Group members with income from oil extraction subject to particular tax treatment in UK U.K.

(1) In calculating the available amount, an amount disclosed in the financial statements of the worldwide group (“the external finance amount”) must be disregarded if conditions A and B are met.

(2) Condition A is that a member of the worldwide group is treated in a relevant accounting period as carrying on a ring fence trade (see section 277 of CTA 2010).

(3) Condition B is that the external finance amount falls to be brought into account for the purposes of corporation tax in calculating the profits of that trade for that accounting period.

(4) In this section “relevant accounting period”, in relation to a member of the worldwide group, means an accounting period of the member that falls wholly or partly within the period of account of the worldwide group.

334 Group members with income from shipping subject to particular tax treatment in UK U.K.

(1) In calculating the available amount, an amount disclosed in the financial statements of the worldwide group (“the external finance amount”) must be disregarded if conditions A and B are met.

(2) Condition A is that a member of the worldwide group is, for a relevant accounting period, a tonnage tax company for the purposes of Schedule 22 to FA 2000.

(3) Condition B is that the external finance amount—

(a) is taken into account in computing relevant shipping profits of that company for that accounting period, or

(b) comprises deductible finance costs outside the ring fence, to the extent that they are adjusted under paragraph 61 or 62 of Schedule 22 to FA 2000.

(4) In this section—

• “relevant accounting period”, in relation to a member of the worldwide group, means an accounting period of the member that falls wholly or partly within the period of account of the worldwide group, and

• “relevant shipping profits” has the same meaning as in Schedule 22 to FA 2000 (see Part 6 of that Schedule).

335 Group members with income from property rental subject to particular tax treatment in UK U.K.

(1) In calculating the available amount, an amount disclosed in the financial statements of the worldwide group (“the external finance amount”) must be disregarded if conditions A and B are met.

(2) Condition A is that a member of the worldwide group is treated in a relevant accounting period as carrying on a separate business under section 541 of CTA 2010 (ring-fencing of property rental business).

(3) Condition B is that the external finance amount falls to be brought into account in calculating the profits arising from that business in that accounting period.

(4) In this section “relevant accounting period”, in relation to a member of the worldwide group, means an accounting period of the member that falls wholly or partly within the period of account of the worldwide group.

336 Meaning of accounting expressions used in this Chapter U.K.

Subject to any provision to the contrary, expressions used in this Chapter have the meaning for the time being given by international accounting standards.

[F9 336A Mismatches between tax treatment and accounting treatment U.K.

(1) The Commissioners may make regulations for the purpose of altering the way in which the available amount is calculated in a case in which an accounts amount in respect of a matter is not equal to the tax amount in respect of that matter.

(2) For this purpose—

(a) the “accounts amount” in respect of a matter is—

(i) the amount disclosed in the financial statements of the worldwide group in respect of the matter, or

(ii) if no amount is so disclosed, nil, and

(b) the “tax amount” in respect of a matter is—

(i) the amount of the deduction to which a member of the worldwide group is entitled under a provision of the Corporation Tax Acts in respect of the matter,

(ii) if more than one member is entitled to such a deduction, the total such deductions, or

(iii) if no member is entitled to such a deduction, nil.

(3) Regulations under this section may amend any provision of this Part.

(4) Regulations under this section may have effect in relation to periods of account of the worldwide group beginning on or after the beginning of the calendar year in which the regulations are made.

(5) Regulations under this section may include provision for the worldwide group to elect that the regulations (or any of them)—

(a) are not to apply in relation to the group, or

(b) are not to apply in relation to periods of account of the worldwide group beginning before the date on which the regulations are made.]

Textual Amendments

F9 S. 336A inserted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 28, 36(1)