21The separate enterprise principleU.K.
(1)The profits of the non-UK resident company that are attributable to the permanent establishment are those that the establishment [F1might be expected to make] if it were a [F2separate and independent enterprise engaged in the same or similar activities under the same or similar conditions, taking into account the functions performed, assets used and risks assumed by the non-UK resident company through the permanent establishment and through the other parts of the non-UK resident company].
(2)In applying subsection (1) assume that—
(a)the permanent establishment has the same credit rating as the non-UK resident company, and
(b)the permanent establishment has such equity and loan capital as it could reasonably be expected to have in the circumstances specified in that subsection.
F3(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F1Words in s. 21(1) substituted (for chargeable periods beginning on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 7 paras. 5(2)(a), 30
F2Words in s. 21(1) substituted (for chargeable periods beginning on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 7 paras. 5(2)(b), 30
F3S. 21(3) omitted (for chargeable periods beginning on or after 1.1.2026) by virtue of Finance Act 2026 (c. 11), Sch. 7 paras. 5(3), 30
Modifications etc. (not altering text)
C1Ss. 21-28 applied (19.7.2011) by Finance Act 2011 (c. 11), Sch. 19 para. 26(3)