Finance Act 2014

Straddling accounting periods U.K.

8 (1) Paragraphs 9 and 10 apply where a company has an accounting period (the “straddling accounting period”) that begins before and ends on or after commencement day. U.K.

(2) In paragraphs 9 and 10 “commencement day” means—

(a) 5 December 2013 (except where paragraph (b) applies);

(b) 1 January 2015, in relation to a company that makes an election under paragraph 7.

(3) Expressions used in paragraph 9 or 10 and in Chapter 8 of Part 8 of CTA 2010 (as inserted by paragraph 3) have the same meaning in the paragraph concerned as in that Chapter.

9 (1) The amount (if any) by which the company's adjusted ring fence profits for the straddling accounting period are reduced under section 356D of CTA 2010 (as inserted by paragraph 3) cannot exceed the appropriate proportion of those profits. U.K.

(2) Section 356DA of CTA 2010 (carrying forward of activated allowance) applies in relation to the company and the accounting period as if the reference in subsection (1)(b) of that section to the adjusted ring fence profits were to the appropriate proportion of those profits.

(3) The “appropriate proportion” of the company's adjusted ring fence profits for the straddling accounting period is—

where—

D is the number of days in the straddling accounting period that fall on or after commencement day;

Y is the number of days in the straddling accounting period;

N is the amount of the company's adjusted ring fence profits for the accounting period.

(4) If the basis of apportionment in sub-paragraph (3) would work unjustly or unreasonably in the company's case, the company may elect for its adjusted ring fence profits to be apportioned on another basis that is just and reasonable and specified in the election.

10 (1) For the purpose of determining the amount of activated allowance the company has with respect to any site— U.K.

(a) for the straddling accounting period (see section 356E of CTA 2010, as inserted by paragraph 3), or

(b) for a reference period that is part of the straddling accounting period (see section 356GB of CTA 2010, as so inserted),

the company's relevant income from the site in the straddling accounting period is taken to be the appropriate proportion of the actual amount of that relevant income.

(2) Accordingly, in relation to the company, the straddling accounting period and the site in question, section 356EB of CTA 2010 (carrying forward of unactivated allowance) has effect as if Y in subsection (1) of that section were defined as the appropriate proportion of the company's relevant income for the straddling accounting period from that site.

(3) The “appropriate proportion” of the company's relevant income from a site in the straddling accounting period is—

D is the number of days in the straddling accounting period that fall on or after commencement day;

Y is the number of days in the straddling accounting period;

I is the amount of the company's relevant income from the site in the straddling accounting period.

(4) If the basis of apportionment in sub-paragraph (3) would work unjustly or unreasonably in the company's case, the company may elect for its adjusted ring fence profits to be apportioned on another basis that is just and reasonable and specified in the election.