Part 2

Charge to corporation tax: basic provisions
Chapter 4

Non-UK resident companies: chargeable profits

The separate enterprise principle

The separate enterprise principle
21
1
The profits of the non-UK resident company that are attributable to the permanent establishment are those that the establishment would have made if it were a distinct and separate enterprise which—
a
engaged in the same or similar activities under the same or similar conditions, and
b
dealt wholly independently with 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.
3
In sections 22 to 28 the principle in subsection (1) (read with subsection (2)) is called “the separate enterprise principle”.
Ss. 21-28 applied (19.7.2011) by Finance Act 2011 (c. 11), Sch. 19 para. 26(3)