Taxation (International and Other Provisions) Act 2010

55 Current year’s non-trading deficits on loan relationships

(1) Subsection (5) applies for the purposes of section 42 if conditions A and B are met.

(2) Condition A is that the company—

(a) has no non-trading credits for the period, or

(b) has non-trading credits for the period but none of those credits is eligible for double taxation relief.

(3) For the purposes of subsection (2)(b), a non-trading credit relating to an item is “eligible for double taxation relief” if there is in respect of that item an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax calculated by reference to that item.

(4) Condition B is that an amount (“the deficit”) is set against any of the company’s profits for the period—

(a) under section 388(1) of CTA 2009 (insurance company’s non-trading deficit on loan relationships set against current year’s profits), or

(b) under section 459(1)(a) of CTA 2009 (other company’s non-trading deficit on loan relationships set against current year’s profits).

(5) The deficit can be allocated only to profits against which the deficit is set under section 388(1) or 459(1)(a) of CTA 2009.

(6) In this section “non-trading credit” means a non-trading credit for the purposes of Part 5 of CTA 2009 (loan relationships).