[F118OTransfers of foreign permanent establishment businessU.K.
(1)This section applies if—
(a)business carried on by a company (“the transferor”) through a permanent establishment in a territory outside the United Kingdom is transferred to a connected company that is (or later becomes) a UK resident company (“the transferee”), and
(b)there is a transferred total opening negative amount in relation to the business transferred.
(2)In a case where the transferor had not made an election under section 18A before the transfer took place, or such an election had not had effect before that time, the “transferred total opening negative amount” is the amount that would have been the total opening negative amount in the case of the transferor at the beginning of the transferor's first relevant accounting period if—
(a)the only business carried on by the transferor was the business transferred,
(b)the transfer had not taken place,
(c)the transferor's first relevant accounting period had begun on the day after the transfer day, and
(d)any reference in section 18J(3) to the accounting period in which the election is made were a reference to the period beginning with the accounting period in which the transfer took place and ending with the transfer day.
(3)In a case where an election made by the transferor under section 18A had effect before the transfer took place, the “transferred total opening negative amount” is—
(a)the amount that would have been the total opening negative amount in the case of the transferor on the transfer day if the accounting period in which the transfer took place had ended on that day (the “remaining total opening negative amount”), less
(b)the amount that would have been the remaining total opening negative amount if the transferor had never carried on the business transferred.
But the transferred total opening negative amount cannot be below nil.
(4)In a case where—
(a)an election made by the transferee under section 18A first has effect after the transfer takes place, and
(b)the accounting period of the transferee in which the transfer took place is an affected prior accounting period for the purposes of section 18J(2),
there is to be added to the adjusted foreign permanent establishments amount in relation to that accounting period a negative amount equal to so much (if any) of the transferred total opening negative amount as is attributable to profits or losses arising after the beginning of the earliest affected prior accounting period of the transferee.
(5)In a case where an election made by the transferee under section 18A had effect before the transfer took place, sections 18K to 18N have effect in relation to the transferee and the transferred total opening negative amount as if—
(a)any reference to the total opening negative amount were a reference to the transferred total opening negative amount,
(b)any reference to the first relevant accounting period were a reference to the period beginning with the day after the transfer day and ending immediately before the start of the next accounting period of the transferee, and
(c)the requirement in section 18L(2) that a streaming election be made at the same time as the company's election under section 18A did not apply.
(6)Where for the purposes of this section it is necessary to apportion the profits and losses for any accounting period to different parts of that period, that apportionment is to be made on a just and reasonable basis.
(7)Any amount included in a transferred total opening negative amount is to be disregarded in the application of sections 18J to 18N in the case of the transferor after the transfer day.
(8)In this section “the transfer day” means the day on which the transfer of the business takes place.]
Textual Amendments
F1Pt. 2 Ch. 3A inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 4, 31