Income and Corporation Taxes Act 1988

400 Write-off of government investment. U.K.

(1) M1 Where any amount of government investment in a body corporate is written-off on or after 6th April 1988, an amount equal to the amount written-off shall be set off against the body’s tax losses as at the end of the accounting period ending last before the write-off date and, to the extent to which that amount exceeds those losses, against the body’s tax losses as at the end of the next accounting period and so on.

(2) For the purposes of subsection (1) above a body’s tax losses as at the end of an accounting period are—

(a) any losses which under section 393(1) are F1 . . . available for relief against its trading income for the next accounting period;

[F2 (b) in the case of a company with investment business, within the meaning of [F3 Part 16 of CTA 2009, any excess that falls to be deducted under section 1223(3) of that Act;]]

[F4 (bb) any losses which—

(i) under section 392A(2) or 392B are carried forward to the next accounting period, or

[F5 (ii) under section 392A(3) are to be carried forward to the next accounting period and treated for the purposes of [F6 Chapter 2 of Part 16 of CTA 2009] as if they were expenses of management deductible for that period;]]

(c) any allowances which under [F7 section 260(2) of the Capital Allowances Act] are available for carry forward to the next accounting period;

(d) any amount paid by way of charges on income so far as it exceeds the company’s profit for the period and is not taken into account [F8 under section 393(9) of this Act or section 1223 of CTA 2009]; and

(e) any allowable losses available under [F9 8 of the 1992 Act] so far as not allowed in that or a previous accounting period.

(3) The set off to be made under subsection (1) above for any accounting period shall be made first against the amounts in paragraphs (a) to (d) of subsection (2) above and, so far as it cannot be so made, against the amount in paragraph (e) of that subsection.

(4) For the purposes of subsection (1) above there shall be excluded from a body’s tax losses as at the end of the accounting period ending last before the write-off date any amounts in respect of which a claim has been made before the write-off date under section [F10 393A(1)] or 402 of this Act or [F11 section 260(3) of the Capital Allowances Act] but the body’s tax losses as at the end of any subsequent accounting period shall be determined as if no such claim had been made on or after that date.

(5) Any amount that could be set off under subsection (1) above against a body’s tax losses as at the end of an accounting period (or could be so set off if that body then had any such losses) may be set off against the tax losses of any other body corporate which at the end of that period is a member of the same group as the first-mentioned body, or partly against the tax losses of one member of that group and partly against those of the other or any of the others, as may be just and reasonable.

(6) Expenditure shall not be treated for the purposes of [F12 section 532 or 536 of the Capital Allowances Act] or section [F13 50 of the 1992] Act as met by the Crown by reason only of the writing-off of any government investment in the body in question and a sum shall not by reason only of any such writing-off be treated as not having been deductible in computing the [F14 profits] of that body for the purposes of [F15 Part 3 of CTA 2009.]

(7) For the purposes of this section an amount of government investment in a body corporate is written-off—

(a) if its liability to repay any money lent to it out of public funds by a Minister of the Crown [F16 or the Scottish Ministers] is extinguished;

(b) if any of its shares for which a Minister of the Crown has [F17 , or the Scottish Ministers have,] subscribed out of public funds are cancelled; or

(c) if its commencing capital debt is reduced otherwise than by being paid off or its public dividend capital is reduced otherwise than by being repaid (including, in either case, a reduction to nil);

and the amount written-off and the write-off date are the amount in respect of which the liability is extinguished and the date on which it is extinguished, the amount subscribed for the shares that are cancelled and the date of cancellation or the amount of reduction in the commencing capital debt or public dividend capital and the date of the reduction, as the case may be.

(8) In subsection (7) above “commencing capital debt” means any debt to a Minister of the Crown [F18 or the Scottish Ministers] assumed as such under an enactment and “public dividend capital” means any amount paid by a Minister of the Crown [F18 or the Scottish Ministers] under an enactment in which that amount is so described or under an enactment corresponding to an enactment in which a payment made on similar terms to another body is so described.

(9) This section shall not have effect in relation to any amount written-off if and to the extent to which it is replaced by money lent, or a payment made, out of public funds or by shares subscribed for, whether for money or money’s worth, by a Minister of the Crown [F18 or the Scottish Ministers].

[F19 (9A) Nothing in [F20 section 464(1) of CTA 2009] (matters to be brought into account in the case of loan relationships only under [F20 Part 5 of that Act]) shall be construed as preventing this section from applying where a government investment in a body corporate is written off by the extinguishment, in whole or in part, of any liability under a loan relationship.]

(10) In this section—

• “body corporate” means any body corporate which is a company for the purposes of corporation tax;

• “group” means a company having one or more 51 per cent. subsidiaries and that or those subsidiaries; and

• “Minister of the Crown” includes a Northern Ireland department.

Textual Amendments

F1 Words in s. 400(2)(a); repealed (27.7.1993 with effect in relation to accounting periods ending after the day appointed for the purposes of section 10 of the amended Act) by 1993 c. 34, s. 213, Sch. 14 para. 8(5), Sch. 23 Pt. III (11), note; omitted (27.7.1993) by 1993 c. 34, s. 120, Sch. 14 paras. 8(5)

F2 S. 400(2)(b) substituted (28.9.2004 with effect in accordance with art. 1(2), Sch. para 13(4) 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), Sch. para. 13(2)(5)

F3 Words in s. 400(2)(b) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 116(2)(a) (with Sch. 2 Pts. 1, 2)

F4 S. 400(2)(bb) inserted (with effect in accordance with s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 5 para. 36 (with Sch. 5 para. 73)

F5 S. 499(2)(bb)(ii) substituted (28.9.2004 with effect in accordance with art. 1(2), Sch. para. 13(4) 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), Sch. para. 13(3)(5)

F6 Words in s. 400(2)(bb)(ii) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 116(2)(b) (with Sch. 2 Pts. 1, 2)

F7 Words in s. 400(2)(c) substituted (with effect in accordance with s. 579(1) of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 35(1) (with Sch. 3)

F8 Words in s. 400(2)(d) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 116(2)(c) (with Sch. 2 Pts. 1, 2)

F9 Words in s. 400(2)(e) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(20)(a) (with ss. 60, 101(1), 171, 201(3)).

F10 Words in s. 400(4) substituted by Finance Act 1991 (c. 31, SIF 63:1), s. 73(3)-(5), Sch. 15 para. 12

F11 Words in s. 400(4) substituted (with effect in accordance with s. 579(1) of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para 35(2) (with Sch. 3)

F12 Words in s. 400(6) substituted (with effect in accordance with s. 579(1) of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para 35(3) (with Sch. 3)

F13 Words in s. 400(6) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(20)(b) (with ss. 60, 101(1), 171, 201(3)).

F14 Words in s. 400(6) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3), Sch. 7 para. 1

F15 Words in s. 400(6) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 116(3) (with Sch. 2 Pts. 1, 2)

F16 Words in s. 400(7)(a) inserted (1.7.1999) by The Scotland Act 1998 (Consequential Modifications) (No. 2) Order 1999 (S.I. 1999/1820), art. 1(2), Sch. 2 para. 87(2)(a)(i) (with art. 5)

F17 Words in s. 400(7)(b) inserted (1.7.1999) by The Scotland Act 1998 (Consequential Modifications) (No. 2) Order 1999 (S.I. 1999/1820), art. 1(2), Sch. 2 para. 87(2)(a)(ii) (with art. 5)

F18 Words in s. 400(8)(9) inserted (1.7.1999) by The Scotland Act 1998 (Consequential Modifications) (No. 2) Order 1999 (S.I. 1999/1820), art. 1(2), Sch. 2 para. 87(2)(b) (with art. 5)

F19 S. 400(9A) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 19 (with Sch. 15)

F20 Words in s. 400(9A) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 116(4) (with Sch. 2 Pts. 1, 2)

Modifications etc. (not altering text)

C1 S. 400 restricted (retrospective to 11.1.1994) by Finance Act 1994 (c. 9), s. 252(3), Sch. 24 para. 16

C2 S. 400 excluded (1.4.2002) by The Scottish Water (Transfer of Functions, etc.) (Tax Provisions) Order 2002 (S.I. 2002/653), art. 4(3)

C3 S. 400 modified (1.4.2002) by The Scottish Water (Transfer of Functions, etc.) (Tax Provisions) Order 2002 (S.I. 2002/653), art. 4(4)

C4 S. 400(1) excluded (31.10.1994) by Coal Industry Act 1994 (c. 21), ss. 20(2), 68(4) (with s. 40(7)); SI 1994/2552, art. 2, Sch.

C5 S. 400(1) excluded (8.11.1995) by Atomic Energy Authority Act 1995 (c. 37), Sch. 3 para. 12(1)

C6 S. 400(6) modified (31.10.1994) by Coal Industry Act 1994 (c. 21), ss. 20(3), 68(4) (with s. 40(7)); SI 1994/2552, art. 2, Sch.

C7 S. 400(6) modified (8.11.1995) by Atomic Energy Authority Act 1995 (c. 37), Sch. 3 para. 12(2)

C8 S. 400(7)(8) applied (with effect in accordance with s. 105(1) of the affecting Act) by Finance Act 1996 (c. 8), Sch. 9 para. 7(2) (with Sch. 15)

C9 S. 400(7)(8) applied (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by Corporation Tax Act 2009 (c. 4), s. 326(3) (with Sch. 2 Pts. 1, 2)

Marginal Citations

M1 Source—1981 s.48