Finance Act 2011

Condition B of motive test U.K.

32 (1) This paragraph applies in relation to a company carrying on business through a permanent establishment in an accounting period which is the first relevant accounting period or an accounting period beginning less than 12 months after the beginning of the first relevant accounting period (an “affected relevant accounting period”) if the company carried on the business through the permanent establishment throughout the period of 12 months ending with the day before that on which this Act is passed (“the pre-commencement year”). U.K.

(2) Condition B in section 18H of CTA 2009 (as inserted by this Schedule) is assumed to be met in relation to an affected relevant accounting period if—

(a) the gross income attributable to the permanent establishment for the affected relevant accounting period does not exceed by more than 10% the gross income attributable to the permanent establishment for the period of 12 months ending immediately before the beginning of the first relevant accounting period (or, if the affected relevant accounting period is less than 12 months, such proportion of that gross income as the length of the affected relevant accounting period bears to 12 months),

(b) there has been no major change in the nature or conduct of the business carried on through the permanent establishment in the period (“the relevant period”) beginning with the pre-commencement year and ending with the end of the affected relevant accounting period, and

(c) no asset attributable to the permanent establishment was previously owned, and no part of the business carried on through the permanent establishment in the affected relevant accounting period was previously carried on, by a company whose chargeable profits and creditable tax (if any) for any accounting period ending within the relevant period were (or, but for an agreement made or undertaking given, would have been) apportioned under section 747(3) of ICTA.

(3) For the purposes of sub-paragraph (2) “major change in the nature or conduct of the business” includes—

(a) a major change in the type of property dealt in, or services or facilities provided, in the business, and

(b) a major change in customers, outlets or markets of the business.

(4) A reference in sub-paragraph (3) to a change includes a change which is achieved gradually as a result of a series of transfers.

33 (1) This paragraph applies in relation to a company (“company A”) carrying on business through a permanent establishment in an accounting period which is the first relevant accounting period or an accounting period beginning less than 12 months after the beginning of the first relevant accounting period (an “affected relevant accounting period”) if a company which— U.K.

(a) was a non-UK resident company, and

(b) was controlled by company A,

(“company B”) carried on the business throughout the period of 12 months ending with the day before that on which this Act is passed (“the pre-commencement year”).

(2) Condition B in section 18H of CTA 2009 (as inserted by this Schedule) is assumed to be met in relation to an affected relevant accounting period if—

(a) the gross income attributable to the permanent establishment for the affected relevant accounting period does not exceed by more than 10% the gross income of the business for the period of 12 months ending immediately before the beginning of the first relevant accounting period of the company (or, if the affected relevant accounting period is less than 12 months, such proportion of that gross income as the length of the affected relevant accounting period bears to 12 months),

(b) there has been no major change in the nature or conduct of the business carried on through the permanent establishment in the period (“the relevant period”) beginning with the pre-commencement year and ending with the end of the affected relevant accounting period,

(c) company B was not a company whose chargeable profits and creditable tax (if any) for any accounting period ending within the relevant period were (or, but for an agreement made or undertaking given, would have been) apportioned under section 747(3) of ICTA, and

(d) no asset attributable to the permanent establishment was previously owned, and no part of the business carried on through the permanent establishment in the affected relevant accounting period was previously carried on, by such a company.

(3) Sub-paragraphs (3) and (4) of paragraph 32 apply for the purposes of sub-paragraph (2).

(4) Section 1124 of CTA 2010 (meaning of “control”) applies for the purposes of this paragraph.