Corporation Tax Act 2009

51 Relationship between rules prohibiting and allowing deductions U.K.

(1) Any relevant permissive rule in this Part—

(a) has priority over any relevant prohibitive rule, but

(b) is subject to—

(i) section 56 (car F1 ... hire),

(ii) section 1288 (unpaid remuneration),

(iii) section 1290 (employee benefit contributions),

(iv) section 1304 (crime-related payments).

[F2 (1A) But, if the relevant permissive rule would allow a deduction in calculating the profits of a trade in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—

(a) does not have priority under subsection (1)(a), and

(b) is subject to any relevant prohibitive rule (and to the provisions mentioned in subsection (1)(b)).]

(2) In this section “any relevant permissive rule in this Part” means any provision of—

(a) Chapter 5 (trade profits: rules allowing deductions), apart from sections 62 to 67,

(b) Chapter 7 (trade profits: gifts to charities etc),

(c) Chapter 9 (trade profits: other specific trades), or

(d) Chapter 12 (deductions from profits: unremittable amounts),

which allows a deduction in calculating the profits of a trade.

(3) In this section “any relevant prohibitive rule”, in relation to any deduction, means any provision of this Part or Chapter 1 of Part 20 (apart from those mentioned in subsection (1)(b)) which might otherwise be read as—

(a) prohibiting or deferring the deduction, or

(b) restricting the amount of the deduction.

[F3 (4) In this section “relevant tax avoidance arrangements” means arrangements—

(a) to which the company carrying on the trade is a party, and

(b) the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).

“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).]

Textual Amendments

F1 Words in s. 51(1)(b)(i) omitted (with effect in accordance with Sch. 11 paras. 65-67 of the commencing Act) by virtue of Finance Act 2009 (c. 10), Sch. 11 para. 46

F2 S. 51(1A) inserted (with effect in accordance with s. 78(5)-(7) of the amending Act) by Finance Act 2013 (c. 29), s. 78(3)(a)

F3 S. 51(4) inserted (with effect in accordance with s. 78(5)-(7) of the amending Act) by Finance Act 2013 (c. 29), s. 78(3)(b)