Corporation Tax Act 2010

[F1 CHAPTER 3 U.K. Northern Ireland rate applied to Northern Ireland profits and losses

Textual Amendments

F1 Pt. 8B inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), s. 1

Introductory U.K.

357J Introductory U.K.

(1) Section 357JA contains provision about—

(a) the charge to corporation tax on Northern Ireland profits and mainstream profits, and

(b) the rate at which Northern Ireland profits are charged.

(2) The subsequent provisions of this Chapter contain provision—

(a) about the availability of relief for Northern Ireland losses and mainstream losses, and

(b) restricting the amount of relief given for Northern Ireland losses in certain circumstances.

Profits chargeable to corporation tax and rates U.K.

357JA Profits chargeable to corporation tax and rates U.K.

(1) The reference in section 35 of CTA 2009 (charge to tax on trade profits) to the profits of a trade is, where a company carrying on a trade in an accounting period has Northern Ireland profits of the trade or mainstream profits of the trade, a reference to those Northern Ireland profits or mainstream profits.

(2) Northern Ireland profits are charged to corporation tax at the Northern Ireland rate.

Section 3(1) of this Act (corporation tax charged at main rate) has effect subject to this subsection.

Loss relief in relation to Northern Ireland profits and losses: [F2 Chapter 2 of Part 4] U.K.

Textual Amendments

F2 Words in s. 357JB cross-heading substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 94

[F3 357JB Availability of relief U.K.

(1) The references in section 37 and sections 45A to 45F (relief for trade losses) to a loss are, where a company carrying on a trade in an accounting period has Northern Ireland losses of the trade or mainstream losses of the trade, references to those Northern Ireland losses or mainstream losses.

(2) If a company has a Northern Ireland loss and a mainstream loss in the same accounting period, sections 37 and 45A to 45F have effect in relation to each of those losses separately.

(3) If by reason of this section a company is entitled under section 37(2), 45A(5), 45B(5) or 45F(2) to make a claim in relation to a Northern Ireland loss (or an amount of such a loss) and a claim in relation to a mainstream loss (or an amount of such a loss), the company may make—

(a) one of those claims only, or

(b) both of those claims in either order.

(4) Where—

(a) relief is given under section 37, 45A, 45B or 45F for a Northern Ireland loss (or an amount of such a loss), and

(b) the profits against which the relief is given includes some profits of the trade that are Northern Ireland profits and some that are not,

the relief is given first, so far as possible, against the Northern Ireland profits.

(5) Where—

(a) relief is given under section 37, 45, 45A, 45B or 45F for a loss (or an amount of a loss) that is not a Northern Ireland loss, and

(b) the profits against which the relief is given include some profits of the trade that are Northern Ireland profits and some that are not,

the relief is given first, so far as possible, against the profits that are not Northern Ireland profits.

Textual Amendments

F3 Ss. 357JB, 357JC substituted for ss. 357JB-357JE (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 95

357JC Restriction on deductions U.K.

(1) Subsection (2) applies where—

(a) relief is given under section 37 for a Northern Ireland loss (“the loss”),

(b) the profits against which the relief is given include profits that are not Northern Ireland profits, and

(c) at any time during the accounting period for which the relief is given (“the profit period”) the Northern Ireland rate is lower than the main rate.

(2) The reference in section 37(4) to “the amount of the loss” is to the restricted deduction for the loss, as determined under section 357JJ (restricted deduction where Northern Ireland rate lower than main rate).

(3) Subsection (4) applies where—

(a) relief is given under section 45A, 45B or 45F for an amount of a Northern Ireland loss (“the loss”),

(b) the profits against which the relief is given include profits that are not Northern Ireland profits, and

(c) at any time during the accounting period for which the relief is given (“the profit period”), the Northern Ireland rate is lower than the main rate.

(4) The reference in section 45A(6), 45B(4) or (as the case may be) 45F(5) to “the unrelieved amount” is to so much of that amount as is equal to the restricted deduction for the loss, as determined under section 357JJ.]

Textual Amendments

F3 Ss. 357JB, 357JC substituted for ss. 357JB-357JE (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 95

Loss relief in relation to Northern Ireland profits and losses: section 45 U.K.

F3 357JD Availability of relief U.K.

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Textual Amendments

F3 Ss. 357JB, 357JC substituted for ss. 357JB-357JE (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 95

F3 357JE Restriction on deductions U.K.

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Textual Amendments

F3 Ss. 357JB, 357JC substituted for ss. 357JB-357JE (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 95

Loss relief in relation to Northern Ireland profits and losses: Part 5 U.K.

357JF Availability of relief U.K.

(1) The reference in section 99(1)(a) (group relief: surrendering of losses and other amounts) to a trading loss is, where a company carrying on a trade in an accounting period has Northern Ireland losses of the trade or mainstream losses of the trade, a reference to those Northern Ireland losses or mainstream losses.

(2) Section 100 (meaning of “trading loss”) has effect subject to subsection (1).

(3) Where—

(a) a company makes a claim for group relief under Part 5 in relation to a surrenderable amount that is a Northern Ireland loss, and

(b) the profits against which the relief is claimed include some profits that are Northern Ireland profits and some that are not,

the relief in relation to that surrenderable amount is given first, so far as possible, against the Northern Ireland profits.

(4) Where—

(a) a company makes a claim for group relief under Part 5 in relation to a surrenderable amount that is not a Northern Ireland loss, and

(b) the profits against which the relief is claimed include some profits that are Northern Ireland profits and some that are not,

the relief in relation to that surrenderable amount is given first, so far as possible, against the profits that are not Northern Ireland profits.

357JG Restriction on deductions U.K.

(1) Subsection (2) applies where—

(a) a company makes a claim for group relief under Part 5 in relation to a surrenderable amount that is a Northern Ireland loss (“the loss”),

(b) the profits against which the relief is claimed include profits that are not Northern Ireland profits, and

(c) at any time during the accounting period for which the relief is claimed (“the profit period”), the Northern Ireland rate is lower than the main rate.

(2) In section 137(2) (amount of deduction)—

(a) the reference in paragraph (a) to “an amount equal to” the surrendering company's surrenderable amounts is, so far as those surrenderable amounts comprise the loss, to the restricted deduction for the loss, as determined under section 357JJ (restricted deduction where Northern Ireland rate lower than main rate);

(b) the reference in paragraph (b) to “an amount equal to” part of the surrendering company's surrenderable amounts is, so far as that part comprises the loss, to the restricted deduction for the loss, as determined under section 357JJ.

357JH Modifications of Chapter 4 of Part 5 U.K.

(1) Chapter 4 of Part 5 (claims for group relief) has effect, in relation to a claim under that Chapter in relation to surrenderable amounts that include a Northern Ireland loss, subject to the following provisions of this section.

(2) In section 138 (limitation on amount of group relief applying to all claims)—

(a) paragraphs (a) and (b) are treated as imposing separate limits;

(b) the limit in paragraph (a) on the amount of group relief to be given on a claim has effect as a limit on the amount of losses and other surrenderable amounts in relation to which relief is to be given on the claim;

(c) the limit in paragraph (b) on the amount of group relief to be given on a claim has effect as a limit on the amount of the deduction to be made as a result of the claim.

(3) In section 139(6)(b) (unused part of the surrenderable amounts), and in section 141(2) so far as it applies in relation to section 139, references to the amount of group relief given on a claim are to the amount of losses and other surrenderable amounts in relation to which relief is given on the claim.

(4) In section 140(6)(b) (unrelieved part of claimant company's available total profits), and in section 141(2) so far as it applies in relation to section 140, references to the amount of group relief given on a claim are to the amount of the deduction made as a result of the claim.

(5) In section 143 (limitation on group relief where surrendering company owned by consortium), the limit in subsection (2) on the amount of group relief to be given on a claim has effect as a limit on the amount of losses and other surrenderable amounts in relation to which relief is to be given on the claim.

(6) In section 144 (limitation on group relief where claimant company owned by consortium), the limit in subsection (2) on the amount of group relief to be given on a claim has effect as a limit on the amount of the deduction to be made as a result of the claim.

(7) In section 146 (conditions 2 and 3: companies in link company's group), the limit in subsections (2) and (3) on the amount of group relief to be given on a claim has effect as a limit on the amount of the deduction to be made as a result of the claim.

(8) In section 148 (conditions 1 and 2: surrendering company in group of companies), the reference in subsection (5) to the maximum amount of group relief that could be given has effect as a reference to the maximum amount of losses and other surrenderable amounts in relation to which relief could be given.

(9) In section 149 (conditions 1 and 3: claimant company in group of companies), the reference in subsection (5) to the maximum amount of group relief that could be claimed by the claimant company has effect as a reference to the maximum amount of the deduction that could be made as a result of claims by the claimant company.

[F4 Loss relief in relation to Northern Ireland profits and losses: Part 5A U.K.

Textual Amendments

F4 Ss. 357JHA-357JHD and cross-heading inserted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 96

357JHA Availability of relief U.K.

(1) The reference in section 188BB(1)(a) (group relief for carried-forward losses: surrendering of carried-forward losses and other amounts) to a loss carried forward to an accounting period of a company under section 45A(4) is, where a company has Northern Ireland losses or mainstream losses carried forward to an accounting period under that section, a reference to those Northern Ireland losses or mainstream losses.

(2) Where—

(a) a company makes a claim for group relief for carried-forward losses under Part 5A in relation to a surrenderable amount that is a Northern Ireland loss, and

(b) the profits against which the relief is claimed include some profits that are Northern Ireland profits and some that are not,

the relief in relation to that surrenderable amount is given first, so far as possible, against the Northern Ireland profits.

(3) Where—

(a) a company makes a claim for group relief for carried-forward losses under Part 5A in relation to a surrenderable amount that is not a Northern Ireland loss, and

(b) the profits against which the relief is claimed include some profits that are Northern Ireland profits and some that are not,

the relief in relation to that surrenderable amount is given first, so far as possible, against the profits that are not Northern Ireland profits.

357JHB Restriction on deductions U.K.

(1) Subsection (2) applies where—

(a) a company makes a claim for group relief for carried-forward losses under Part 5A in relation to a surrenderable amount that is a Northern Ireland loss (“the loss”),

(b) the profits against which the relief is claimed include profits that are not Northern Ireland profits, and

(c) at any time during the accounting period for which the relief is claimed (“the profit period”), the Northern Ireland rate is lower than the main rate.

(2) In section 188CK(2) and (4) (amount of deduction)—

(a) the reference in paragraph (a) to “an amount equal to” the surrendering company's surrenderable amounts is, so far as those surrenderable amounts comprise the loss, to the restricted deduction for the loss, as determined under section 357JJ (restricted deduction where Northern Ireland rate lower than main rate);

(b) the reference in paragraph (b) to “an amount equal to” part of the surrendering company's surrenderable amounts is, so far as that part comprises the loss, to the restricted deduction for the loss, as determined under section 357JJ.

357JHC Modifications of Chapter 4 of Part 5A U.K.

(1) Chapter 4 of Part 5A (limitations on group relief for carried-forward losses: claims under section 188CB) has effect, in relation to a claim under section 188CB in relation to surrenderable amounts that include a Northern Ireland loss, subject to the following provisions of this section.

(2) In section 188DB(1) (limitation on amount of group relief for carried-forward losses applying to all claims under section 188CB)—

(a) paragraphs (a) and (b) are treated as imposing separate limits;

(b) the limit in paragraph (a) on the amount of group relief for carried-forward losses to be given on a claim under section 188CB has effect as a limit on the amount of losses and other surrenderable amounts in relation to which relief is to be given on the claim;

(c) the limit in paragraph (b) on the amount of group relief for carried-forward losses to be given on a claim under section 188CB has effect as a limit on the amount of the deduction to be made as a result of the claim.

(3) In section 188DC(6)(b) (unused part of the surrenderable amounts), and in section 188DF(2) so far as it applies in relation to section 188DC, references to the amount of group relief for carried-forward losses given on a claim are to the amount of losses and other surrenderable amounts in relation to which relief is given on the claim.

(4) In section 188DE(4)(b) (previously claimed group relief for carried-forward losses), and in section 188DF(2) so far as it applies in relation to section 188DE, references to the amount of group relief for carried-forward losses given on a claim are to the amount of the deduction made as a result of the claim.

(5) In section 188DH (limitation on group relief for carried-forward losses where claim under section 188CB is based on consortium condition 1), the limit in subsection (2) on the amount of group relief for carried-forward losses to be given on a claim has effect as a limit on the amount of the deduction to be made as a result of the claim.

(6) In section 188DL (limitation on group relief for carried-forward losses where claim under section 188CB is made by member of a group of companies)—

(a) the reference in subsection (3)(a) to the maximum amount of group relief for carried-forward losses that could be claimed by the claimant company has effect as a reference to the maximum amount of the deduction that could be made as a result of claims by the claimant company, and

(b) the reference in subsection (3)(b) to the maximum amount of group relief under Part 5 that could be claimed by the claimant company has effect as a reference to the maximum amount of the deduction that could be made as a result of claims by the claimant company.

357JHD Modifications of Chapter 5 of Part 5A U.K.

(1) Chapter 5 of Part 5A (limitations on group relief for carried-forward losses: claims under section 188CC) has effect, in relation to a claim under section 188CC in relation to surrenderable amounts that include a Northern Ireland loss, subject to the following provisions of this section.

(2) In section 188EB(1) (limitation on amount of group relief for carried-forward losses applying to all claims under section 188CC)—

(a) paragraphs (a), (b) and (c) are treated as imposing separate limits;

(b) the limit in paragraph (a) on the amount of group relief for carried-forward losses to be given on a claim under section 188CC has effect as a limit on the amount of losses and other surrenderable amounts in relation to which relief is to be given on the claim;

(c) the limits in paragraphs (b) and (c) on the amount of group relief for carried-forward losses to be given on a claim under section 188CC have effect as limits on the amount of the deduction to be made as a result of the claim.

(3) In section 188EC(6) and (8)(b) (unused part of the surrenderable amounts attributable to the specified-loss making period), and in section 188EG(2) so far as it applies in relation to section 188EC, references to the amount of group relief for carried-forward losses given on a claim are to the amount of losses and other surrenderable amounts in relation to which relief is given on the claim.

(4) In section 188EE(4)(b) (previously claimed group relief for carried-forward losses), and in section 188EG(2) so far as it applies in relation to section 188EE, references to the amount of group relief for carried-forward losses given on a claim are to the amount of the deduction made as a result of the claim.

(5) In section 188EI (condition 4: companies in link company's group), the limit in subsections (2) and (3) on the amount of group relief for carried-forward losses to be given on a claim has effect as a limit on the amount of the deduction to be made as a result on the claim.

(6) In section 188EK (condition 3 or 4: surrendering company in group of companies), the reference in subsection (4) to the maximum amount of group relief for carried-forward losses that could be given has effect as a reference to the maximum amount of losses and other surrenderable amounts in relation to which relief could be given.]

Transfers of trade without a change of ownership: Chapter 1 of Part 22 U.K.

357JI Transfers of trade without a change of ownership U.K.

(1) This section applies where—

(a) Chapter 1 of Part 22 (transfers of trade without a change of ownership) applies to the transfer of a trade, and

(b) a loss made by the predecessor in the transferred trade is a Northern Ireland loss or a mainstream loss.

(2) [F5 Sections 943A to 944C (which modify the application of Chapter 2 of Part 4) have effect as if the references in those sections] to a loss made by the predecessor in the transferred trade were to the Northern Ireland loss or mainstream loss.

Textual Amendments

F5 Words in s. 357JI(2) substituted (with effect in accordance with Sch. 10 para. 32 of the amending Act) by Finance Act 2019 (c. 1), Sch. 10 para. 27

Restricted deductions U.K.

357JJ Restricted deduction: Northern Ireland rate lower than main rate U.K.

(1) The amount of the restricted deduction for a Northern Ireland loss for the purposes of section [F6 357JC(2) or (4), 357JG(2) or 357JHB(2)] is the amount determined under subsection (2) or (3).

(2) If the profit period falls within only one financial year, the amount of the restricted deduction for the loss is—

where—

NIR is the Northern Ireland rate in the financial year;

MR is the main rate in the financial year;

L1 is the amount of the loss that is unmatched;

L2 is the amount of the loss (if any) that is matched.

(3) If the profit period falls within more than one financial year, the amount of the restricted deduction for the loss is—

where—

X is the amount of the loss that is unmatched (“the unmatched loss”), adjusted in accordance with subsection (4);

L2 is the amount of the loss (if any) that is matched.

(4) To adjust the unmatched loss for the purposes of subsection (3), take the following steps—

• Step 1 Apportion the unmatched loss between the financial years on a time basis according to the respective lengths of the parts of the profit period falling within those years.

• Step 2 Where an amount is apportioned under step 1 to a financial year in which the Northern Ireland rate is lower than the main rate, reduce that amount by multiplying it by the following fraction—

  

  where—

  • NIR is the Northern Ireland rate for the financial year;

  • MR is the main rate for the financial year.

• Step 3 Add together each amount reduced under step 2 and each amount apportioned under step 1 but not reduced under step 2.

(5) For the purposes of this section—

(a) an amount of a loss is “matched” if relief in relation to the loss is given against Northern Ireland profits, and

(b) an amount of a loss is “unmatched” if relief in relation to the loss is given against profits that are not Northern Ireland profits.

(6) In this section “the loss” and “the profit period” have the meanings given by section [F7 357JC(1) or (3), 357JG(1) or 357JHB(1)] (as the case may be).]

Textual Amendments

F6 Words in s. 357JJ(1) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 97(a)

F7 Words in s. 357JJ(6) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 97(b)