Taxation (International and Other Provisions) Act 2010

CHAPTER 8 U.K. “Tested expense amount” and “tested income amount”

329 The tested expense amount U.K.

(1) References in this Part to the “tested expense amount” for a period of account of the worldwide group are to the sum of the net financing deductions of each relevant group company.

(2) References in this Part to the “net financing deduction” of a company for a period of account of the worldwide group are to—

(a) the sum of the company's financing expense amounts for the period (see section 313), less

(b) the sum of the company's financing income amounts for the period (see section 314).

(3) References in subsection (2) to a company's financing expense amounts or financing income amounts for a period of account of the worldwide group do not include any amount that [F1 accrues] at a time at which the company is not a relevant group company.

(4) If the amount determined in accordance with subsection (2) is negative, the net financing deduction of the company for the period is nil.

(5) If the amount determined in accordance with subsection (2) is small (see section 331), the net financing deduction of the company for the period is nil.

[F2 (6) But subsection (5) does not apply if an election under section 331ZA has effect for the period of account.]

Textual Amendments

F1 Word in s. 329(3) substituted (with effect in accordance with Sch. 5 para. 22(2) of the amending Act) by Finance Act 2012 (c. 14), Sch. 5 para. 12(2)

F2 S. 329(6) inserted (with effect in accordance with Sch. 5 para. 22(2) of the amending Act) by Finance Act 2012 (c. 14), Sch. 5 para. 12(3)

330 The tested income amount U.K.

(1) References in this Part to the “tested income amount” for a period of account of the worldwide group are to the sum of the net financing incomes of each UK group company.

(2) The reference in subsection (1) to the “net financing income” of a company for a period of account of the worldwide group is to—

(a) the sum of the company's financing income amounts for the period (see section 314), less

(b) the sum of the company's financing expense amounts for the period (see section 313).

(3) References in subsection (2) to a company's financing expense amounts or financing income amounts for a period of account of the worldwide group do not include any amount that [F3 accrues] at a time at which the company is not a UK group company.

(4) If the amount determined in accordance with subsection (2) is negative, the net financing income of the company for the period is nil.

(5) If the amount determined in accordance with subsection (2) is small (see section 331), the net financing income of the company for the period is nil.

[F4 (6) But subsection (5) does not apply if an election under section 331ZA has effect for the period of account.]

Textual Amendments

F3 Word in s. 330(3) substituted (with effect in accordance with Sch. 5 para. 22(2) of the amending Act) by Finance Act 2012 (c. 14), Sch. 5 para. 13(2)

F4 S. 330(6) inserted (with effect in accordance with Sch. 5 para. 22(2) of the amending Act) by Finance Act 2012 (c. 14), Sch. 5 para. 13(3)

331 Companies with net financing deduction or net financing income that is small U.K.

(1) An amount determined in accordance with section 329(2) or 330(2) is “small” if it is less than £500,000.

(2) The Treasury may by order amend subsection (1) by substituting a higher or lower amount for the amount for the time being specified there.

(3) An order under subsection (2) may only be made if a draft of the statutory instrument containing the order has been laid before and approved by a resolution of the House of Commons.

(4) An order under subsection (2) may only have effect in relation to periods of account of the worldwide group beginning after the date on which the order is made.

[F5 331ZA Elections disapplying sections 329(5) and 330(5) U.K.

(1) The relevant reporting body of the worldwide group may elect that sections 329(5) and 330(5) are not to apply in relation to the group.

(2) The election must specify—

(a) the first period of account of the worldwide group in relation to which it has effect, and

(b) the name and tax reference of—

(i) each company that is a UK group company at the time the election is made, and

(ii) any other company that was a UK group company at any time during the period beginning at the same time as that period of account and ending when the election is made.

(3) An election has effect for the specified period of account and subsequent periods of account of the worldwide group (unless withdrawn under subsection (4) or replaced by a further election made in relation to the group).

(4) The relevant reporting body of the worldwide group may withdraw an election with effect from the beginning of the period of account specified in the withdrawal.

(5) “The relevant reporting body” means—

(a) if an appointment under section 288 has effect in relation to the specified period of account, the company appointed under that section, and

(b) if such an appointment does not have effect, the companies which are UK group companies at the relevant time, acting jointly.

But the companies within paragraph (b) do not include any company that is a dormant company throughout the specified period of account.

(6) An election or withdrawal must—

(a) be made by notice in writing to an officer of Revenue and Customs, and

(b) be received by HMRC within 12 months of the end of the specified period of account.

(7) The notice must be signed—

(a) in a case within paragraph (a) of subsection (5), by the appropriate person in relation to the company appointed under section 288, and

(b) in a case within paragraph (b) of that subsection, by the appropriate person in relation to each company within that paragraph.

(8) For the purposes of this section—

• “the appropriate person”, in relation to a company, means—

  (a)

  the proper officer of the company, or

  (b)

  such other person as may for the time being have the express, implied or apparent authority of the company to act on its behalf for the purposes of this Part,

  and subsections (3) and (4) of section 108 of TMA 1970 (responsibility of company officers: meaning of “proper officer”) apply as they apply for the purposes of that section;

• “relevant time” means—

  (a)

  in the case of an election, the time the election is made, and

  (b)

  in the case of a withdrawal of an election, the time the withdrawal is made;

• “specified period of account” means—

  (a)

  in the case of an election, the period specified under subsection (2)(a), and

  (b)

  in the case of a withdrawal of an election, the period specified under subsection (4).]

Textual Amendments

F5 S. 331ZA inserted (with effect in accordance with Sch. 5 para. 22(2) of the amending Act) by Finance Act 2012 (c. 14), Sch. 5 para. 14

[F6 331A Mismatches between tax treatment and accounting treatment U.K.

(1) The Commissioners may make regulations for the purpose of altering the way in which the tested expense amount or the tested income amount is calculated in a case in which an accounts amount in respect of a matter is not equal to the tax amount in respect of that matter.

(2) For this purpose—

(a) the “accounts amount” in respect of a matter is—

(i) the amount disclosed in the financial statements of the worldwide group in respect of the matter, or

(ii) if no amount is so disclosed, nil, and

(b) the “tax amount” in respect of a matter is—

(i) the amount of the deduction to which a member of the worldwide group is entitled under a provision of the Corporation Tax Acts in respect of the matter,

(ii) if more than one member is entitled to such a deduction, the total such deductions, or

(iii) if no member is entitled to such a deduction, nil.

(3) Regulations under this section may amend any provision of this Part.

(4) Regulations under this section may have effect in relation to periods of account of the worldwide group beginning on or after the beginning of the calendar year in which the regulations are made.

(5) Regulations under this section may include provision for the worldwide group to elect that the regulations (or any of them)—

(a) are not to apply in relation to the group, or

(b) are not to apply in relation to periods of account of the worldwide group beginning before the date on which the regulations are made.]

Textual Amendments

F6 S. 331A inserted (retrospectively) by Finance (No. 3) Act 2010 (c. 33), Sch. 5 paras. 25, 36(1)