Income and Corporation Taxes Act 1988

[F3 797A Foreign tax on [F1 items giving rise to] a non-trading credit [F2 : loan relationships]. U.K.

(1) This section applies for the purposes of any arrangements where, in the case of any company—

(a) any non-trading credit relating to an [F4 item] is brought into account for the purposes of [F5 Part 5 of CTA 2009] (loan relationships) for any accounting period (“the applicable accounting period”); and

(b) there is in respect of [F6 that item] an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax computed by reference to that interest.

(2) It shall be assumed that tax chargeable under [F7 section 299 of CTA 2009] on the profits F8 . . . arising for the applicable accounting period from the company’s loan relationships falls to be computed on the actual amount of its non-trading credits for that period, and without any deduction in respect of non-trading debits.

(3) Section 797(3) shall have effect (subject to subsection (7) below) as if—

(a) there were for the applicable accounting period an amount equal to the adjusted amount of the non-trading debits falling to be brought into account by being set against profits of the company for that period of any description; and

(b) different parts of that amount might be set against different profits.

(4) For the purposes of this section, the adjusted amount of a company’s non-trading debits for any accounting period is the amount equal, in the case of that company, to the aggregate of the non-trading debits given for that period for the purposes of [F9 Part 5 of CTA 2009] (loan relationships) less the aggregate of the amounts specified in subsection (5) below.

(5) Those amounts are—

(a) so much of any non-trading deficit for the applicable accounting period as is an amount to which a claim under [F10 section 389(1) or 459(1)(b) of CTA 2009][F11 (deficit carried back and set against profits)] relates; [F12 and]

[F13 (aa) so much of any non-trading deficit for that period as is surrendered as group relief by virtue of section 403 of the Taxes Act 1988; and]

(b) so much of any non-trading deficit for that period as falls to be carried forward to a subsequent period in accordance with [F14 section 391 or 457(1) of CTA 2009]; F15 . . .

(c) F15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F16 F17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ]

(6) Section 797(3) shall have effect as if any amount [F18 carried forward to the applicable accounting period [F19 under [F20 section 457(1) of CTA 2009]]] were an amount capable of being allocated only to any non-trading profits of the company.

(7) Where—

(a) the company has a non-trading deficit for the applicable accounting period,

(b) the amount of that deficit exceeds the aggregate of the amounts specified in subsection (5) above, and

(c) [F21 as the result of—

(i) the application of section 388(1) of CTA 2009 (insurance companies: basic rule: deficit set off against income and gains of deficit period), or

(ii) a claim under section 459(1)(a) of that Act (claim to set off deficit against profits of deficit period),]

the excess falls to be set off against profits of any description,

section 797(3) shall have effect as if non-trading debits of the company which in aggregate are equal to the amount of the excess were required to be allocated to the profits against which they are set off in pursuance of the claim.

[F22 F23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(8) In this section “non-trading profits” has the same meaning as in [F24 Chapter 16 of Part 5 of CTA 2009 (see section 457(5) of that Act)].]

Textual Amendments

F1 Word in s. 797A sidenote substituted (with effect in accordance with Sch. 30 para. 7(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 30 para. 7(3)

F2 Words in s. 797A sidenote added (24.7.2002) by Finance Act 2002 (c. 23), Sch. 30 para. 5(3)

F3 S. 797A inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 43 (with Sch. 15)

F4 Word in s. 797A(1)(a) substituted (with effect in accordance with Sch. 30 para. 7(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 30 para. 7(2)(a)

F5 Words in s. 797A(1)(a) 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. 247(2) (with Sch. 2 Pts. 1, 2)

F6 Words in s. 797A(1)(b) substituted (with effect in accordance with Sch. 30 para. 7(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 30 para. 7(2)(b)

F7 Words in s. 797A(2) 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. 247(3)(a) (with Sch. 2 Pts. 1, 2)

F8 Words in s. 797A(2) repealed (1.4.2009 with effect in accordance with s. 1329(1) of the repealing Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 247(3)(b), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F9 Words in s. 797A(4) 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. 247(4) (with Sch. 2 Pts. 1, 2)

F10 Words in s. 797A(5)(a) 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. 247(5)(a) (with Sch. 2 Pts. 1, 2)

F11 Words in s. 797A(5)(a) substituted (with effect in accordance with s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), Sch. 25 para. 55(2)(a)(ii)

F12 Word at the end of s. 797A(5)(a) inserted (retrospectively) by Finance Act 1998 (c. 36), s. 82(2)(b)(4)

F13 S. 797A(5)(aa) inserted (with effect in accordance with s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), Sch. 25 para. 55(2)(b)

F14 Words in s. 797A(5)(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. 247(5)(b) (with Sch. 2 Pts. 1, 2)

F15 S. 797A(5)(c) and preceding word repealed (retrospectively) by Finance Act 1998 (c. 36), s. 82(2)(b)(4), Sch. 27 Pt. 3(17), Note

F16 Words at the end of s. 797A(5) inserted (retrospectively) by Finance Act 1998 (c. 36), s. 82(2)(c)(4)

F17 Words in s. 797A(5) repealed (with effect in accordance with s. 82(2) of the repealing Act) by Finance Act 2002 (c. 23), Sch. 40 Pt. 3(12), Note

F18 Words in s. 797A(6) substituted (retrospectively) by Finance Act 1998 (c. 36), s. 82(2)(d)(4)

F19 Words in s. 797A(6) substituted (with effect in accordance with s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), Sch. 25 para. 55(3)

F20 Words in s. 797A(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. 247(6) (with Sch. 2 Pts. 1, 2)

F21 Words in s. 797A(7)(c) 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. 247(7) (with Sch. 2 Pts. 1, 2)

F22 Words at the end of s. 797A(7) inserted (retrospectively) by Finance Act 1998 (c. 36), s. 82(2)(e)(4)

F23 Words in s. 797A(7) repealed (with effect in accordance with s. 82(2) of the repealing Act) by Finance Act 2002 (c. 23), Sch. 40 Pt. 3(12), Note

F24 Words in s. 797A(8) 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. 247(8) (with Sch. 2 Pts. 1, 2)

Modifications etc. (not altering text)

C1 Ss. 797-798C applied (31.12.2006 with effect in accordance with reg. 1(2) of the amending S.I.) by The Lloyd's Underwriters (Double Taxation Relief) (Corporate Members) Regulations 2006 (S.I. 2006/3262), reg. 4