Finance Act 2011

4 (1) Section 748 of ICTA (cases where apportionment of chargeable profits and creditable tax under section 747(3) does not apply) is amended as follows. U.K.

(2) In subsection (1), after paragraph (d) insert—

“(da) the relevant profits for the accounting period, after any adjustment required by subsection (3C), do not exceed—

(i) £200,000, or

(ii) if the accounting period is less than 12 months, a proportionately reduced amount; or”.

(3) After subsection (3) insert—

“(3A) The reference in subsection (1)(da) to the relevant profits for an accounting period are to the sum of—

(a) the profits of the company for that period calculated in accordance with generally accepted accounting practice (disregarding any exempt distributions and any capital gains or losses), before any adjustment required or authorised by law in calculating chargeable profits,

(b) any amount which accrues during that period to the trustees of a settlement in relation to which the company is a settlor or a beneficiary, and

(c) the company's share of any income which accrues during that period to a partnership of which the company is a partner.

(3B) For the purposes of subsection (3A)—

(a) “exempt distribution” means a distribution (within the meaning of Part 23 of CTA 2010) which would be excluded from the company's chargeable profits by reason of it being exempt for the purposes of Part 9A of CTA 2009 (company distributions),

(b) where there is more than one settlor or beneficiary in relation to the settlement mentioned in subsection (3A)(b), the income is to be apportioned between the company and the other settlors or beneficiaries on a just and reasonable basis, and

(c) the company's share of any income which accrues to a partnership as mentioned in subsection (3A)(c) is to be determined by apportioning that income between the company and the other partners on a just and reasonable basis;

and in subsection (3A) and this subsection “partnership” includes an entity established under the law of a country or territory outside the United Kingdom of a similar character to a partnership; and “partner” is to be read accordingly.

(3C) For the purposes of subsection (1)(da), Part 4 of TIOPA 2010 (transfer pricing) applies in relation to the calculation of the relevant profits for the accounting period as it applies in relation to the calculation of the chargeable profits for that period.

(3D) But where the difference made in the amount of the relevant profits for the period as a result of the application of subsection (3C) would (disregarding this subsection) not exceed £50,000, no adjustment under that subsection is to be made.”

(4) In subsection (6) for “section” substitute “ sections 748ZA and ”.