Taxation (International and Other Provisions) Act 2010

[F1 Key concepts U.K.

Textual Amendments

F1 Pt. 10: the existing Pt. 10 renumbered as Pt. 11 (except for ss. 375, 376 which are repealed), the existing ss. 372-374, 377-382 renumbered as ss. 499-507 and a new Pt. 10 (ss. 372-498) inserted (with effect in accordance with Sch. 5 para. 25(1)-(3) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 1, 10(1)(2)(a)(3) (with Sch. 5 paras. 27, 32-34)

433 Meaning of “qualifying infrastructure company” U.K.

(1) For the purposes of this Chapter a company is a “qualifying infrastructure company” throughout an accounting period if—

(a) it meets the public infrastructure income test for the accounting period (see subsections (2) to (4)),

(b) it meets the public infrastructure assets test for the accounting period (see subsections (5) to (10)),

(c) it is fully taxed in the United Kingdom in the accounting period [F2 (see subsections (11) and (12))], and

(d) it has made an election for the purposes of this section that has effect for the accounting period (see section 434).

(2) A company meets the public infrastructure income test for an accounting period if all, or all but an insignificant proportion, of its income for the accounting period derives from—

(a) qualifying infrastructure activities carried on by the company (see sections 436 and 437),

(b) shares in a qualifying infrastructure company, or

(c) loan relationships or other financing arrangements to which the only other party is a qualifying infrastructure company.

(3) A company also meets the public infrastructure income test for an accounting period if it has no income for the period.

(4) In determining whether the public infrastructure income test for an accounting period is met, income which does not derive from any of the matters mentioned in subsection (2)(a) to (c) is ignored if, having regard to all the circumstances, it is reasonable to regard the amount of the income as insignificant.

(5) A company meets the public infrastructure assets test for an accounting period if all, or all but an insignificant proportion, of the total value of the company's assets recognised in an appropriate balance sheet on each day in that period derives from—

(a) tangible assets that are related to qualifying infrastructure activities,

(b) service concession arrangements in respect of assets that are related to qualifying infrastructure activities,

(c) financial assets to which the company is a party for the purpose of the carrying on of qualifying infrastructure activities by the company or another associated qualifying infrastructure company,

[F3 (ca) assets held for the purposes of a pension scheme under which benefits are provided to, or in respect of, persons employed for the purpose of the carrying on of qualifying infrastructure activities by the company or another associated qualifying infrastructure company,

(cb) assets in respect of deferred tax so far as attributable to qualifying infrastructure activities carried on by the company or another associated qualifying infrastructure company,]

(d) shares in a qualifying infrastructure company, or

(e) loan relationships or other financing arrangements to which the only other party is a qualifying infrastructure company.

(6) If a company has no assets recognised in an appropriate balance sheet on any day in an accounting period, the company is to be taken as meeting the public infrastructure assets test in respect of that day.

(7) In determining whether the public infrastructure assets test for an accounting period is met in respect of any day, the value of an asset which does not derive from any of the matters mentioned in subsection (5)(a) to (e) is ignored if, having regard to all the circumstances, it is reasonable to regard the value of the asset as insignificant.

(8) For the purposes of subsection (5)(a) and (b) assets are “related to qualifying infrastructure activities” in the case of a company if the assets are—

(a) public infrastructure assets (see section 436(2) and (5)) in relation to the company that are provided by the company, or

(b) other assets used in the course of a qualifying infrastructure activity carried on by the company or by an associated qualifying infrastructure company.

(9) For the purposes of this section the reference to the value of an asset recognised in an appropriate balance sheet of a company on a day is to the value which is, or would be, recognised in a balance sheet of the company drawn up on that day.

(10) A company is not to be taken as failing to meet the public infrastructure assets test for an accounting period if, ignoring this subsection, that test would have been failed on a particular day or days merely as a result of particular circumstances—

(a) which existed, and

(b) which were always intended to exist,

for a temporary period of an insignificant duration.

(11) A company is fully taxed in the United Kingdom in an accounting period if—

(a) every [F4 source of income that the company has] at any time in the accounting period is within the charge to corporation tax,

(b) the company has not made an election under section 18A of CTA 2009 (exemption for profits or losses of foreign permanent establishments) that has effect for the accounting period, and

(c) the company has not made a claim for relief under Chapter 2 of Part 2 (double taxation relief) for the accounting period.

[F5 (12) In determining whether the condition in subsection (11)(a) is met in the case of a company not resident in the United Kingdom in an accounting period, a source of income of the company is ignored if, having regard to all the circumstances, it is reasonable to regard as insignificant the amount of income arising in the accounting period from the source.]

Textual Amendments

F2 Words in s. 433(1)(c) substituted (retrospectively) by Finance Act 2018 (c. 3), Sch. 8 paras. 7(2), 23(1)

F3 S. 433(5)(ca)(cb) inserted (retrospectively) by Finance Act 2019 (c. 1), Sch. 11 paras. 12, 24

F4 Words in s. 433(11)(a) substituted (retrospectively) by Finance Act 2018 (c. 3), Sch. 8 paras. 7(3), 23(1)

F5 S. 433(12) inserted (retrospectively) by Finance Act 2018 (c. 3), Sch. 8 paras. 7(4), 23(1)

434 Elections under section 433 U.K.

(1) An election under section 433—

(a) must be made before [F6 the end] of the accounting period in relation to which it is to have effect, and

(b) has effect in relation to that accounting period and all subsequent accounting periods (subject to subsections (2) to (4)).

(2) An election under section 433 may be revoked.

(3) A revocation of an election under section 433—

(a) must be made before the beginning of the accounting period from which the revocation is to have effect, but

(b) cannot have effect in relation to any accounting period that begins before the end of the period of 5 years beginning with the first day of the first accounting period in relation to which the election had effect.

(4) Once revoked, a fresh election may be made under section 433 but cannot have effect in relation to any accounting period that begins before the end of the period of 5 years beginning with the first day of the accounting period from which the revocation had effect.

(5) If—

(a) a qualifying infrastructure company transfers to another company a business, or a part of a business, that consists of the carrying on of qualifying infrastructure activities,

[F7 (ab) the time of the transfer falls in a period of account of a worldwide group of which both the transferor and transferee are members,] and

(b) the transferee has not made an election under section 433 that has effect for the accounting period in which the transfer takes place,

the transferee is to be treated as if it had made the election under that section that the transferor had made.

(6) If a company has made an election under section 433 that has effect in relation to an accounting period, the company—

(a) may not make an election under section 18A of CTA 2009 that has effect for the accounting period, and

(b) may not make a claim for relief under Chapter 2 of Part 2 for the accounting period.

Textual Amendments

F6 Words in s. 434(1)(a) substituted (retrospectively) by Finance Act 2018 (c. 3), Sch. 8 paras. 8(2), 23(1)

F7 S. 434(5)(ab) inserted (retrospectively) by Finance Act 2018 (c. 3), Sch. 8 paras. 8(3), 23(1)

435 Group elections modifying the operation of sections 433 and 434 U.K.

(1) Two or more companies which are members of the same worldwide group [F8 , and have each made an election under section 433,] may jointly make an election under this section modifying the operation of sections 433 and 434 in relation to them for the times during which they remain members of that group.

(2) An election under this section—

[F9 (aa) must be made before the end of the earliest elected accounting period (see subsection (11));]

(a) has effect from a date specified in the election [F10 , which may not be before the first day of the earliest elected accounting period];

(b) may be revoked jointly by the members of the group in relation to which the election has effect from a date specified in the revocation;

(c) ceases to have effect in relation to a company which gives a notice to an officer of Revenue and Customs, and to the companies in relation to which the election has effect, notifying them of its withdrawal from the election from a date specified in the notice.

(3) A date specified in [F11 a revocation] or notice may not be before the date on which it is made or given.

(4) An election under this section which has effect at particular times (“relevant times”) in relation to particular companies (“elected companies”) modifies the operation of sections 433 and 434 as follows.

(5) If an elected company (“C”) has made an election under section 433 which has effect for an accounting period that includes relevant times, that section has effect as if, in determining whether anything is insignificant for the purposes of section 433(2), (4), (5) or (7), C also had the income and assets that the other elected companies had at those times.

(6) If—

(a) an elected company (“C”) has made an election under section 433 which has effect for an accounting period including relevant times, and

(b) C fails to meet one or more of the tests in subsection (1)(a) to (c) of that section in relation to that accounting period otherwise than as a result of this subsection,

all the other elected companies are also treated as failing to meeting those tests for so much of their accounting periods as consists of the relevant times in the accounting period of C.

(7) If, in a case where subsection (6) applies, the deemed failed period does not coincide with an accounting period of another elected company (“E”), the accounting period of E is treated for the purposes of this Part as if it consisted of separate accounting periods beginning and ending at such times as secure that none of the separate accounting periods fall partly within the deemed failed period.

(8) For this purpose “the deemed failed period” means the period consisting of the relevant times in the accounting period of C mentioned in subsection (6).

(9) All such apportionments as are necessary for the purposes of, or in consequence of, subsections (5) to (7) are to be made on a just and reasonable basis.

(10) If—

(a) elected companies have made elections under section 433 which have effect for accounting periods including relevant times, and

(b) more than half of those elected companies have each made an election under that section that has had effect for a period of at least 5 years,

section 434(3)(b) does not apply in relation to any of the elected companies.

[F12 (11) The “earliest elected accounting period” is the accounting period which—

(a) is the first elected accounting period of an elected company, and

(b) begins no later than the first elected accounting period of each other elected company.

(12) For the purposes of subsection (11), the “first elected accounting period” of an elected company is the first of the company’s accounting periods in relation to which the election is to have effect.

(13) If there is more than one earliest elected accounting period under subsection (11) and those periods (the “relevant periods”) do not all end on the same date, the “earliest elected accounting period” is the relevant period that ends no later than each of the other relevant periods.]

Textual Amendments

F8 Words in s. 435(1) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 14(2)

F9 S. 435(2)(aa) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 14(3)(a)

F10 Words in s. 435(2)(a) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 14(3)(b)

F11 Words in s. 435(3) substituted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 14(4)

F12 S. 435(11)-(13) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 14(5)

436 Meaning of “qualifying infrastructure activity” U.K.

(1) For the purposes of this Chapter a company carries on a “qualifying infrastructure activity” if the company—

(a) provides an asset that is a public infrastructure asset in relation to it (see subsections (2) and (5)), or

(b) carries on any other activity that is ancillary to, or facilitates, the provision of an asset that is a public infrastructure asset in relation to it.

(2) For the purposes of this Chapter an asset is a “public infrastructure asset” in relation to a company at any time if—

(a) the asset is, or is to be, a tangible asset forming part of the infrastructure of the United Kingdom or the UK sector of the continental shelf,

(b) the asset meets the public benefit test (see subsections (3) and (4)),

(c) the asset has had, has or is likely to have an expected economic life of at least 10 years, and

(d) the asset meets the group balance sheet test [F13 (see subsections (10) and (10A))] in relation to the company.

(3) An asset meets the “public benefit test” if—

(a) the asset is, or is to be, procured by a relevant public body, or

(b) the asset is, or is to be, used in the course of a regulated activity.

(4) An asset is used in the course of a “regulated activity” if its use—

(a) is regulated by an infrastructure authority (see section 437(2)), or

(b) could be regulated by an infrastructure authority if the authority exercised any of its powers.

(5) For the purposes of this Chapter a building, or part of a building, is also a “public infrastructure asset” in relation to a company at any time if—

[F14 (a) the building or part is, or is to be, let on a short-term basis —

(i) within a UK property business carried on by the company, or another member of the worldwide group of which it is a member at that time, and

(ii) to persons who, at that time, are not related parties of the company or member.]

(c) the building or part has had, has or is likely to have an expected economic life of at least 10 years, and

(d) the building or part meets the group balance sheet test in relation to the company.

[F15 (5A) But a building, or part of a building, is not a public infrastructure asset in relation to a company at a particular time if, were the building or part to be disposed of at that time, profits arising from the disposal would be charged to corporation tax as profits of a trade.]

(6) A building, or part of a building, is “let” to a person if the person is entitled to the use of the building or part under a lease or other arrangement.

(7) A building, or part of a building, is let on a “short-term basis” if the lease or other arrangement in question—

(a) has an effective duration which is 50 years or less, and

(b) is not an arrangement to which any provision of Chapter 2 of Part 16 of CTA 2010 applies (finance arrangements).

(8) Whether or not a lease or other arrangement has an effective duration which is 50 years or less is determined in accordance with Chapter 4 of Part 4 of CTA 2009 (reading any reference to a lease as a reference to a lease or other arrangement within subsection (6)).

(9) For the purposes of this section references to a building or part of a building being let include the building or part being sub-let, and, accordingly, references to a lease include a sub-lease.

(10) An asset meets the “group balance sheet test” in relation to a company at any time if—

(a) an entry in respect of the asset is, or would be, recognised (whether as a tangible asset or otherwise) in a balance sheet of the company, or an associated company, that is drawn up at that time, and

(b) the company or associated company is within the charge to corporation tax at that time in respect of all of its sources of income and no election or claim mentioned in section 433(11)(b) or (c) has effect for a period including that time.

[F16 (10A) In determining whether the condition in subsection (10)(b) is met in relation to a company not resident in the United Kingdom at any time, a source of income of the company is ignored if, having regard to all the circumstances, it is reasonable to regard as insignificant the amount of income arising from the source for the accounting period including that time.]

(11) For the purposes of this Chapter references to provision, in relation to a public infrastructure asset, include its acquisition, design, construction, conversion, improvement, operation or repair.

Textual Amendments

F13 Words in s. 436(2)(d) substituted (retrospectively) by Finance Act 2018 (c. 3), Sch. 8 paras. 9(2), 23(1)

F14 S. 436(5)(a) substituted for s. 436(5)(a)(b) (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 15(2)

F15 S. 436(5A) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 15(3)

F16 S. 436(10A) inserted (retrospectively) by Finance Act 2018 (c. 3), Sch. 8 paras. 9(3), 23(1)

437 Section 436: supplementary U.K.

(1) In section 436 “infrastructure” includes—

(a) water, electricity, gas, telecommunications or sewerage facilities,

(b) oil pipelines, oil terminals or oil refineries,

(c) railway facilities (including rolling stock), roads or other transport facilities,

(d) health or educational facilities,

(e) facilities or housing accommodation provided for use by members of any of the armed forces or of any police force,

(f) court or prison facilities,

(g) waste processing facilities, and

(h) buildings (or parts of buildings) occupied by any relevant public body.

(2) Each of the following is an “infrastructure authority” for the purposes of section 436(4)—

(a) the Civil Aviation Authority so far as exercising functions in relation to the provision of airports (within the meaning of the Airports Act 1986),

(b) each of the following so far as exercising functions in relation to waste processing—

(i) the Environment Agency,

(ii) the Scottish Environmental Protection Agency,

(iii) the Northern Ireland Environment Agency, or

(iv) Natural Resources Wales,

(c) the Gas and Electricity Markets Authority,

(d) each of the following so far as exercising functions in relation to the management of ports or harbours—

(i) a harbour authority within the meaning of the Harbours Act 1964, or

(ii) a harbour authority within the meaning of the Harbours Act (Northern Ireland) 1970,

(e) the Northern Ireland Authority for Utility Regulation,

(f) the Office of Communications so far as exercising functions in relation to the provision of electronic communication services (within the meaning of the Communications Act 2003) or the management of the radio spectrum,

(g) the Office of Nuclear Regulation,

(h) the Office of Rail and Road,

(i) the Oil and Gas Authority,

(j) the Water Services Regulation Authority or the Water Industry Commission for Scotland, or

(k) any other public authority which has functions of a regulatory nature exercisable in relation to the use of tangible assets forming part of the infrastructure of the United Kingdom or the UK sector of the continental shelf.

(3) The Commissioners may by regulations amend the definition of “infrastructure authority”.]