Income and Corporation Taxes Act 1988

Schedule 28A U.K. [F1 Change in ownership of company with investment business: deductions]

Textual Amendments

F1 Sch. 28A heading substituted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by virtue of The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(11)

Modifications etc. (not altering text)

C1 Sch. 28A modified (22.7.2004) by Finance Act 2004 (c. 12), s. 43(7)

Part I U.K. Significant increase in company capital

General U.K.

1 The provisions referred to in section 768B(2) for determining whether there is a significant increase in the amount of a company’s capital after a change in the ownership of the company are as follows.

The basic rule U.K.

2 There is a significant increase in the amount of a company’s capital if amount B—

(a) exceeds amount A by at least £1 million; or

(b) is at least twice amount A.

Amount A U.K.

3 (1) Amount A is the lower of—

(a) the amount of the company’s capital immediately before the change in the ownership; and

(b) the highest 60 day minimum amount for the pre-change year, found in accordance with sub-paragraphs (2) to (6) below.

(2) Find the daily amounts of the company’s capital over the pre-change year.

(3) Take the highest of the daily amounts.

(4) Find out whether there was in the pre-change year a period of 60 days or more in which there was no daily amount lower than the amount taken.

(5) If there was, the amount taken is the highest 60 day minimum amount for the pre-change year.

(6) If there was not, take the next highest of the daily amounts and repeat the process in sub-paragraph (4) above; and so on, until the highest 60 day minimum amount for the pre-change year is found.

(7) In this Part of this Schedule “the pre-change year” means the period of one year ending immediately before the change in the ownership of the company in question.

Amount B U.K.

4 (1) Amount B is the highest 60 day minimum amount for the post-change period (finding that amount for that period in the same way as the highest 60 day minimum amount for the pre-change year is found).

(2) In this paragraph “the post-change period” means the period of three years beginning with the change in the ownership of the company in question.

Capital and amounts of capital U.K.

5 (1) The capital of a company consists of the aggregate of—

(a) the amount of the paid up share capital of the company;

(b) the amount outstanding of any debts incurred by the company which are of a description mentioned in any of paragraphs (a) to (c) of section 417(7); and

(c) the amount outstanding of any redeemable loan capital issued by the company.

(2) For the purposes of sub-paragraph (1) above—

(a) the amount of the paid up share capital includes any amount in the share premium account of the company (construing “share premium account” in the same way as in section 130 of the M1 Companies Act 1985); and

(b) the amount outstanding of any debts includes any interest due on the debts.

(3) Amounts of capital shall be expressed in sterling and rounded up to the nearest pound.

Marginal Citations

M1 1985 c. 6.

Part II U.K. Amounts in issue for purposes of section 768B

6 The amounts in issue referred to in section 768B(4)(c) are—

(a) [F2 the amount of any expenses of management referable to the accounting period (within the meaning of section 75)] being divided, except any such expenses as would (apart from section 768B) be deductible in computing profits otherwise than under section 75;

(b) the amount of any charges which are paid in that accounting period wholly and exclusively for the purposes of the company’s business;

(c) the amount of any excess carried forward under [F3 section 75(9)] to the accounting period being divided;

(d) the amount of any allowances falling to be made for that accounting period by virtue of [F4 section 253 of the Capital Allowances Act] which would (apart from section 768B) be added to the expenses of management for that accounting period by virtue of [F5 section 75(7)];

[F6 (da) the amount (if any) of the adjusted Case III profits and gains or non-trading deficit of the company for that accounting period [F7 (other than one within sub-paragraph (dc) below)] ;

(db) the amount of any non-trading debit (other than one within sub-paragraph F8 . . . (dd) below) that falls to be brought into account for that accounting period for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) in respect of any debtor relationship of the company;

(dc) the amount of any non-trading [F9 deficit carried forward to that accounting period under] section [F10 83(3A)] of the Finance Act 1996 (carried forward deficit not set off against profits);

(dd) the amount of any non-trading debit given for that accounting period by paragraph 13 of Schedule 15 to the Finance Act 1996 (transitional adjustment for past interest) in respect of any debtor relationship of the company;]

[F11 (de) the amount of any non-trading credits or debits in respect of intangible fixed assets that fall to be brought into account for that period under paragraph 34 of Schedule 29 to the Finance Act 2002;

(df) the amount of any non-trading loss on intangible fixed assets carried forward to that accounting period under paragraph 35(3) of that Schedule;]

(e) any other amounts by reference to which the profits or losses of that accounting period would (apart from section 768B) be calculated.

Textual Amendments

F2 Words in Sch. 28A para. 6(a) substituted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(2)

F3 Words in Sch. 28A para. 6(c) substituted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(3)

F4 Words in Sch. 28A para. 6(d) substituted (with effect in accordance with s. 579 of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 67(1)

F5 Words in Sch. 28A para. 6(d) substituted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(4)

F6 Sch. 28A para. 6(da)-(dd) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 54(1) (with Sch. 15)

F7 Words in Sch. 28A para. 6(da) inserted (retrospectively) by Finance Act 1998 (c. 36), s. 82(3)(a)(4)

F8 Words in Sch. 28A para. 6(db) repealed (retrospectively) by Finance Act 1998 (c. 36), s. 82(3)(b)(4), Sch. 27 Pt. 3(17), Note

F9 Words in Sch. 28A para. 6(dc) substituted (retrospectively) by Finance Act 1998 (c. 36), s. 82(3)(c)(4)

F10 Words in Sch. 28A para. 6(dc) substituted (with effect in accordance with s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), Sch. 25 para. 58(2)

F11 Sch. 28A para. 6(de)(df) inserted (24.7.2002) by Finance Act 2002 (c. 23), Sch. 30 para. 4(4)

6A For the purposes of paragraph 6(da) above, the amount for any accounting period of the adjusted Case III profits and gains or non-trading deficit of a company is the amount which, as the case may be, would be—

(a) the amount of the profits and gains chargeable under Case III of Schedule D as profits and gains arising from the company’s loan relationships, or

(b) the amount of the company’s non-trading deficit on those relationships for that period,

if, in computing that amount, amounts for that period falling within paragraph 6(db) to (dd) above were disregarded.

Part III U.K. Apportionment for purposes of section 768B

7 (1) Subject to paragraph 8 below, the apportionment required by section 768B(4)(c) shall be made—

[F12 (a) in the case of the sums mentioned in paragraph 6(a) above, by apportioning to each accounting period the amounts that would fall to be brought into account in that period as such sums, if it were a period of account for which accounts were drawn up in accordance with generally accepted accounting practice;

(aa) in the case of the charges mentioned in paragraph 6(b) above, by reference to the time when the charge is due to be paid;]

(b) in the case of the excess mentioned in paragraph 6(c) above, [F13 or in the case of the non-trading [F14 deficit] mentioned in paragraph 6(dc) above,] by apportioning the whole amount of the excess [F15 or, as the case may be, of the deficit] to the first part of the accounting period being divided;

(c) in the case of the amounts mentioned in paragraph 6(d) [F16 , (da)] and (e) above, by reference to the respective lengths of the parts of the accounting period being divided;

[F17 (d) in the case of any such debit as—

(i) is mentioned in paragraph 6(db) above,

(ii) falls to be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 in accordance with an [F18 amortised cost] basis of accounting, F19 . . .

(iii) so falls to be brought into account otherwise than on the assumption, specified in paragraph 2(2) of Schedule 9 to that Act, that the interest to which it relates does not accrue until it is paid [F20 , and

(iv) so falls to be brought into account without any adjustment under paragraph 17 or 18 of that Schedule (debit relating to amount of discount referable to the relevant accounting period to be brought into account instead for the accounting period in which the security is redeemed),]

by reference to the time of accrual of the amount to which the debit relates;

(e) in the case of any such debit as—

(i) is mentioned in paragraph 6(db) above,

(ii) falls to be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 in accordance with an [F18 amortised cost] basis of accounting, F21 . . . [F22 and

(iii) so falls to be brought into account—

• — on the assumption mentioned in paragraph (d)(iii) above, or

• — with such an adjustment as is mentioned in paragraph (d)(iv) above,]

by apportioning the whole amount of the debit to the first part of the accounting period being divided;

(f) in the case of any such debit as is mentioned in paragraph 6(dd) above, by apportioning the whole amount of the debit to the first part of the accounting period being divided.]

[F23 (g) in the case of any such credit or debit as is mentioned in paragraph 6(de), by apportioning to each accounting period the credits or debits that would fall to be brought into account in that period if it were a period of account for which accounts were drawn up in accordance with generally accepted accounting practice;

(h) in the case of any such loss as is mentioned in paragraph 6(df) above, by apportioning the whole amount of the loss to the first part of the accounting period being divided.]

(2) F24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F12 Sch. 28A para. 7(1)(a)(aa) substituted for para. 7(1)(a) (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(5)

F13 Words in Sch. 28A para. 7(1)(b) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 54(3)(a) (with Sch. 15)

F14 Words in Sch. 28A para. 7(1)(b) substituted (retrospectively) by Finance Act 1998 (c. 36), s. 82(3)(d)(4)

F15 Words in Sch. 28A para. 7(1)(b) inserted (with effect in accordance with Sch. 7 para. 3(9) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 3(4)

F16 Words in Sch. 28A para. 7(1)(c) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 54(3)(b) (with Sch. 15)

F17 Sch. 28A para. 7(1)(d)-(f) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 54(3)(c) (with Sch. 15)

F18 Words in Sch. 28A para. 7(1)(d)(ii)(e)(ii) substituted (with effect in accordance with s. 52(3) of the amending Act (as amended (retrospectively) by 2005 c. 7, Sch. 4 para. 50, Sch. 11 Pt. 2(7)) by Finance Act 2004 (c. 12), Sch. 10 para. 45

F19 Word preceding Sch. 28A para. 7(1)(d)(iii) repealed (with effect in accordance with s. 82(2) of the repealing Act) by Finance Act 2002 (c. 23), Sch. 25 para. 58(3), Sch. 40 Pt. 3(12), Note

F20 Sch. 28A para. 7(1)(d)(iv) and preceding word inserted (with effect in accordance with s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), Sch. 25 para. 58(3)

F21 Word preceding Sch. 28A para. 7(1)(e)(iii) repealed (with effect in accordance with s. 82(2) of the repealing Act) by Finance Act 2002 (c. 23), Sch. 25 para. 58(4), Sch. 40 Pt. 3(12), Note

F22 Sch. 28A para. 7(1)(e)(iii) and preceding word substituted for para. 7(1)(e)(iii)(iv) (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(6)

F23 Sch. 28A para. 7(1)(g)(h) inserted (24.7.2002) by Finance Act 2002 (c. 23), Sch. 30 para. 4(5)

F24 Sch. 28A para. 7(2) repealed (with effect in accordance with s. 82(2) of the repealing Act) by Finance Act 2002 (c. 23), Sch. 25 para. 58(5), Sch. 40 Pt. 3(12), Note

8 If it appears that any method of apportionment given by paragraph 7 above would work unreasonably or unjustly for any case for which it is given, such other method shall be used for that case as appears just and reasonable.

Part IV U.K. [F25 Disallowed debits and non-trading deficits]

Textual Amendments

F25 Sch. 28A Pt. 4 title substituted (with effect in accordance with Sch. 7 para. 3(9) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 3(8)

9 (1) This paragraph has effect in a case to which section 768B applies for determining the debits to be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) for—

(a) the accounting period beginning immediately after the change in the ownership of the company; and

(b) any subsequent accounting period.

(2) The debits so brought into account shall not include the debits falling within paragraph 11 below to the extent (if at all) that the aggregate of—

(a) the amount of those debits, and

(b) the amount of any debits falling within that paragraph which have been brought into account for the purposes of that Chapter for any previous accounting period ending after the change in the ownership,

exceeds the profits for the accounting period ending with the change in the ownership.

(3) The reference in sub-paragraph (2) above to the profits is a reference to profits after making all deductions and giving all reliefs that for the purposes of corporation tax are made or given against the profits, including deductions and reliefs which under any provision are treated as reducing them for those purposes.

9A (1) This paragraph has effect in any case to which section 768B applies where the non-trading deficit mentioned in paragraph 6(dc) above is apportioned by paragraph 7(b) above to the first part of the accounting period being divided.

(2) In any such case, none of that non-trading deficit shall be carried forward to—

(a) the accounting period beginning immediately after the change in the ownership of the company, or

(b) any subsequent accounting period.

10 (1) This paragraph has effect in a case to which section 768C applies for determining the debits to be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) for—

(a) the accounting period beginning immediately after the change in the ownership of the relevant company; and

(b) any subsequent accounting period.

(2) The debits so brought into account for any such accounting period shall not include the debits falling within paragraph 11 below to the extent (if at all) that the amount of those debits exceeds the modified total profits for the accounting period.

(3) The reference in sub-paragraph (2) above to the modified total profits for an accounting period is a reference to the total profits for that period—

(a) reduced, if that period is the period in which the relevant gain accrues, by an amount equal to the amount of the total profits for that period which represents the relevant gain; and

(b) after making all deductions and giving all reliefs that for the purposes of corporation tax are made or given against the profits, including deductions and reliefs which under any provision are treated as reducing them for those purposes, other than any reduction by virtue of paragraph 1(2) of Schedule 8 to the Finance Act 1996.

(4) Where by virtue of sub-paragraph (2) above a debit is to any extent not brought into account for an accounting period, that debit may (to that extent) be brought into account for the next accounting period, but this is subject to the application of sub-paragraphs (1) to (3) above to that next accounting period.

10A (1) This paragraph has effect in any case to which section 768C applies where the non-trading deficit mentioned in paragraph 13(1)(ec) below is apportioned by paragraph 16(1)(b) below to the first part of the accounting period being divided.

(2) In any such case, none of that non-trading deficit shall be carried forward to—

(a) the accounting period beginning immediately after the change in the ownership of the company, or

(b) any subsequent accounting period.

11 (1) A debit falls within this paragraph if it is a non-trading debit which—

(a) falls to be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 in accordance with an [F26 amortised cost] basis of accounting;

[F27 (b) so falls to be brought into account—

(i) with an adjustment under paragraph 17 or 18 of Schedule 9 to that Act (debit relating to amount of discount referable to the relevant accounting period to be brought into account instead for the accounting period in which the security is redeemed); or

(ii) on the assumption, specified in sub-paragraph (2) of paragraph 2 of that Schedule, that the interest to which it relates does not accrue until it is paid; and]

(c) [F28 apart from paragraphs 2(2), 17 and 18 of that Schedule,] would have fallen to be brought into account for those purposes for an accounting period ending before or with the change in the ownership of the company or, as the case may be, the relevant company.

(2) The debits that fall within this paragraph also include—

(a) F29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) any non-trading debit given by paragraph 13 of Schedule 15 to the Finance Act 1996 (transitional adjustment for past interest) in respect of any debtor relationship of the company or, as the case may be, the relevant company.

(3) The debits that fall within this paragraph also include any non-trading debit which—

(a) is not such a debit as is mentioned in sub-paragraph (1) or (2) above;

(b) is a debit in respect of a debtor relationship of the company or, as the case may be, the relevant company;

(c) falls to be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 in accordance with an [F26 amortised cost] basis of accounting; and

(d) relates to an amount that accrued before the change in the ownership of that company.

(4) In this paragraph “post-change accounting period” means the accounting period beginning immediately after the change in the ownership of the company or, as the case may be, the relevant company.

Textual Amendments

F26 Words in Sch. 28A para. 11(1)(a)(3)(c) substituted (with effect in accordance with s. 52(3) of the amending Act (as amended (retrospectively) by 2005 c. 7, Sch. 4 para. 50, Sch. 11 Pt. 2(7)) by Finance Act 2004 (c. 12), Sch. 10 para. 45

F27 Sch. 28A para. 11(1)(b) substituted for para. 11(1)(b)(bb) (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(7)

F28 Words in Sch. 28A para. 11(1)(c) substituted (with effect in accordance with s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), Sch. 25 para. 58(6)(b)

F29 Sch. 28A para. 11(2)(a) repealed (retrospectively) by Finance Act 1998 (c. 36), s. 82(3)(e)(4), Sch. 27 Pt. 3(17), Note

12 Expressions used both in this Part of this Schedule and in Chapter II of Part IV of the Finance Act 1996 have the same meanings in this Part of this Schedule as in that Chapter.

Part V U.K. Amounts in issue for purposes of section 768C

13 (1) The amounts in issue referred to in section 768C(3)(c) are—

(a) the amount which would in accordance with the relevant provisions of the 1992 Act (and apart from section 768C) be included in respect of chargeable gains in the total profits for the accounting period being divided;

(b) [F30 the amount of any expenses of management referable to the accounting period (within the meaning of section 75)] being divided except any such expenses as would (apart from section 768C) be deductible in computing total profits otherwise than under section 75;

(c) the amount of any charges which are paid in that accounting period wholly and exclusively for the purposes of the company’s business;

(d) the amount of any excess carried forward under [F31 section 75(9)] to the accounting period being divided;

(e) the amount of any allowances falling to be made for that accounting period by virtue of [F32 section 253 of the Capital Allowances Act] which would (apart from section 768C) be added to the expenses of management for that accounting period by virtue of [F33 section 75(7)];

[F34 (ea) the amount (if any) of the adjusted Case III profits and gains or non-trading deficit of the company for that accounting period [F35 (other than one within paragraph (ec) below)];

(eb) the amount of any non-trading debit (other than one within paragraph F36 . . . (ed) below) that falls to be brought into account for that accounting period for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) in respect of any debtor relationship of the company;

(ec) the amount of any non-trading [F37 deficit carried forward to that accounting period under] section [F38 83(3A)] of the Finance Act 1996 (carried forward deficit not set off against profits);

(ed) the amount of any non-trading debit given for that accounting period by paragraph 13 of Schedule 15 to the Finance Act 1996 (transitional adjustment for past interest) in respect of any debtor relationship of the company;]

[F39 (ee) the amount of any non-trading credits or debits in respect of intangible fixed assets that fall to be brought into account for that period under paragraph 34 of Schedule 29 to the Finance Act 2002;

(ef) the amount of any non-trading loss on intangible fixed assets carried forward to that accounting period under paragraph 35(3) of that Schedule;] and

(f) any other amounts by reference to which the profits or losses of the accounting period being divided would (apart from section 768C) be calculated.

(2) In sub-paragraph (1)(a) above “the relevant provisions of the 1992 Act” means section 8(1) of and Schedule 7A to that Act.

Textual Amendments

F30 Words in Sch. 28A para. 13(1)(b) substituted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(8)(a)

F31 Words in Sch. 28A para. 13(1)(d) substituted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(8)(b)

F32 Words in Sch. 28A para. 13(1)(e) substituted (with effect in accordance with s. 579 of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 67(2)

F33 Words in Sch. 28A para. 13(1)(e) substituted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(8)(c)

F34 Sch. 28A para. 13(1)(ea)-(ed) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 54(5) (with Sch. 15)

F35 Words in Sch. 28A para. 13(1)(ea) inserted (retrospectively) by Finance Act 1998 (c. 36), s. 82(3)(f)(4)

F36 Words in Sch. 28A para. 13(1)(eb) repealed (retrospectively) by Finance Act 1998 (c. 36), s. 82(3)(g)(4), Sch. 27 Pt. 3(17), Note

F37 Words in Sch. 28A para. 13(1)(ec) substituted (retrospectively) by Finance Act 1998 (c. 36), s. 82(3)(h)(4)

F38 Words in Sch. 28A para. 13(1)(ec) substituted (with effect in accordance with s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), Sch. 25 para. 58(7)

F39 Sch. 28A para. 13(1)(ee)(ef) inserted (24.7.2002) by Finance Act 2002 (c. 23), Sch. 30 para. 4(6)

13A Paragraph 6A above shall apply for the purposes of paragraph 13(1)(ea) above as it applies for the purposes of paragraph 6(da) above.

Part VI U.K. Apportionment for purposes of section 768C

14 The apportionment required by section 768C(3)(c) shall be made as follows.

15 In the case of the amount mentioned in paragraph 13(1)(a) above—

(a) if it does not exceed the amount of the relevant gain, the whole of it shall be apportioned to the second part of the accounting period being divided;

(b) if it exceeds the amount of the relevant gain, the excess shall be apportioned to the first part of the accounting period being divided and the relevant gain shall be apportioned to the second part.

16 (1) Subject to paragraph 17 below, the apportionment shall be made—

[F40 (a) in the case of the sums mentioned in paragraph 13(1)(b) above, by apportioning to each accounting period the amounts that would fall to be brought into account in that period as such sums, if it were a period of account for which accounts were drawn up in accordance with generally accepted accounting practice;

(aa) in the case of the charges mentioned in paragraph 13(1)(c) above, by reference to the time when the charge is due to be paid;]

(b) in the case of the excess mentioned in paragraph 13(1)(d) above, [F41 or in the case of the non-trading [F42 deficit] mentioned in paragraph 13(1)(ec) above,] by apportioning the whole amount of the excess [F43 or, as the case may be, of the deficit] to the first part of the accounting period being divided;

(c) in the case of the amounts mentioned in paragraph 13(1)(e) [F44 , (ea)] and (f) above, by reference to the respective lengths of the parts of the accounting period being divided;

[F45 (d) in the case of any such debit as—

(i) is mentioned in paragraph 13(1)(eb) above,

(ii) falls to be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 in accordance with an [F46 amortised cost] basis of accounting, F47 . . .

(iii) so falls to be brought into account otherwise than on the assumption, specified in paragraph 2(2) of Schedule 9 to that Act, that the interest to which it relates does not accrue until it is paid [F48 , and

(iv) so falls to be brought into account without any adjustment under paragraph 17 or 18 of that Schedule (debit relating to amount of discount referable to the relevant accounting period to be brought into account instead for the accounting period in which the security is redeemed),]

by reference to the time of accrual of the amount to which the debit relates;

(e) in the case of any such debit as—

(i) is mentioned in paragraph 13(1)(eb) above,

(ii) falls to be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 in accordance with an [F46 amortised cost] basis of accounting, F49 . . . [F50 and

(iii) so falls to brought into account—

• — on the assumption mentioned in paragraph (d)(iii) above, or

• — with such an adjustment as is mentioned in paragraph (d)(iv) above,]

by apportioning the whole amount of the debit to the first part of the accounting period being divided;

(f) in the case of any such debit as is mentioned in paragraph 13(1)(ed) above, by apportioning the whole amount of the debit to the first part of the accounting period being divided;]

[F51 (g) in the case of any such credit or debit as is mentioned in paragraph 13(ee), by apportioning to each accounting period the credits or debits that would fall to be brought into account in that period if it were a period of account for which accounts were drawn up in accordance with generally accepted accounting practice;

(h) in the case of any such loss as is mentioned in paragraph 13(ef), by apportioning the whole amount of the loss to the first part of the accounting period being divided.]

(2) F52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F40 Sch. 28A para. 16(1)(a)(aa) substituted for para. 16(1)(a) (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(9)

F41 Words in Sch. 28A para. 16(1)(b) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 54(7)(a) (with Sch. 15)

F42 Words in Sch. 28A para. 16(1)(b) substituted (retrospectively) by Finance Act 1998 (c. 36), s. 82(3)(i)(4)

F43 Words in Sch. 28A para. 16(1)(b) inserted (with effect in accordance with Sch. 7 para. 3(9) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 3(7)

F44 Words in Sch. 28A para. 16(1)(c) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 54(7)(b) (with Sch. 15)

F45 Sch. 28A para. 16(1)(d)-(f) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 54(7)(c) (with Sch. 15)

F46 Words in Sch. 28A para. 16(1)(d)(ii)(e)(ii) substituted (with effect in accordance with s. 52(3) of the amending Act (as amended (retrospectively) by 2005 c. 7, Sch. 4 para. 50, Sch. 11 Pt. 2(7)) by Finance Act 2004 (c. 12), Sch. 10 para. 45

F47 Word preceding Sch. 28A para. 16(1)(d)(iii) repealed (with effect in accordance with s. 82(2) of the repealing Act) by Finance Act 2002 (c. 23), Sch. 25 para. 58(8), Sch. 40 Pt. 3(12), Note

F48 Sch. 28A para. 16(1)(d)(iv) and preceding word inserted (with effect in accordance with s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), Sch. 25 para. 58(8)

F49 Word preceding Sch. 28A para. 16(1)(e)(iii) repealed (with effect in accordance with s. 82(2) of the repealing Act) by Finance Act 2002 (c. 23), Sch. 25 para. 58(9), Sch. 40 Pt. 3(12), Note

F50 Sch. 28A para. 16(1)(e)(iii) and preceding word substituted for para. 16(1)(e)(iii)(iv) (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 39(10)

F51 Sch. 28A para. 16(1)(g)(h) inserted (24.7.2002) by Finance Act 2002 (c. 23), Sch. 30 para. 4(7)

F52 Sch. 28A para. 16(2) repealed (with effect in accordance with s. 82(2) of the repealing Act) by Finance Act 2002 (c. 23), Sch. 25 para. 58(10), Sch. 40 Pt. 3(12), Note

17 If it appears that any method of apportionment given by paragraph 16 above would work unreasonably or unjustly for any case for which it is given, such other method shall be used for that case as appears just and reasonable.