the requirements specified in subsection (2) are met, and

is made under a liability incurred for a valuable and sufficient consideration,

is not charged to capital,

is ultimately borne by the company, and

in the case of a company not resident in the United Kingdom, is incurred wholly and exclusively for the purposes of a trade which is or is to be carried on by it in the United Kingdom through a branch or agency.

the company deducts tax from the payment in accordance with section 349, and accounts under Schedule 16 for the tax so deducted, or

the person beneficially entitled to the income in respect of which the payment is made is a company that is not resident in the United Kingdom but which carries on a trade in the United Kingdom through a branch or agency and the payment falls to be brought into account in computing the chargeable profits (within the meaning given by section 11(2) of that company, or

the payment is one payable out of income brought into charge to tax under Case V of Schedule D.

it is payable in respect of the company’s loan relationships, or

it is a royalty to which Schedule 29 to the Finance Act 2002 applies (intangible fixed assets).

in respect of dividends or other distributions; nor

in respect of any yearly interest, annuity or other annual payment or in respect of any such other payments as are mentioned in section 348(2), but not including sums which are, or but for any exemption would be, chargeable under Schedule A.

payments of any description mentioned in subsection (3) below, not being dividends or other distributions of the company; and

payments which are qualifying donations (within the meaning of section 339);

any yearly interest (whether charged to revenue or capital), annuity or other annual payment and any such other payments as are mentioned in section 348(2) but not including sums which are or, but for any exemption would be, chargeable under Schedule A; and

any other interest (whether charged to revenue or capital) payable in the United Kingdom on an advance from a bank carrying on a bona fide banking business in the United Kingdom, or from a person who in the opinion of the Board is bona fide carrying on business as a member of the Stock Exchange or bona fide carrying on the business of a discount house in the United Kingdom;

M5the company deducts income tax from the payment in accordance with section 349, and accounts under Schedule 16 for the tax so deducted, or

M6it is a payment of interest on a quoted Eurobond falling within section 124; or

M7the payment is a payment of interest falling within section 340; or

the payment is one payable out of income brought into charge to tax under Case IV or V of Schedule D.

the payment, not being interest, is charged to capital or the payment is not ultimately borne by the company; or

the payment is not made under a liability incurred for a valuable and sufficient consideration (and, in the case of a company not resident in the United Kingdom, incurred wholly and exclusively for the purposes of a trade F11which is or is to be carried on by it in the United Kingdom through a branch or agency), and is not a covenanted donation to charity (within the meaning of section 339).

the company exists wholly or mainly for the purpose of carrying on a trade; or

the payment of interest is wholly and exclusively laid out or expended for the purposes of a trade carried on by the company; or

the company is an investment company, within the meaning of section 130 and including an authorised unit trust; or

the interest qualifies under section 338A for treatment in accordance with this paragraph as a charge on income.

at the time when the interest is paid the company in question owns an estate or interest in land, or the property in a caravan or house-boat, in the United Kingdom or the Republic of Ireland;

the interest is not interest incurred by overdrawing an account or by debiting the account of any person as the holder of a credit card or under similar arrangements.

are loans the interest on which qualifies under this section for treatment as a charge on income; and

fall within subsection (1)(b) above in respect of the same land, caravan or house-boat.

if the amount on which interest is payable under any loan exceeds the limit specified in subsection (3) above, so much only of the interest that would otherwise qualify under this section shall so qualify as bears to the whole of that interest the same proportion as that part of that amount that does not exceed the limit bears to the whole of that amount; and

if the amount on which interest is payable under the earlier loans mentioned in that subsection is equal to or exceeds the qualifying maximum for the year of assessment in which the interest is paid, none of the interest on the later loan shall qualify under this section for treatment as a charge on income.

the land, caravan or house-boat is used as the only or main residence of an individual, and

the interest is paid on a home improvement loan,

where the purchaser has, since 15th April 1969, disposed of an estate or interest in the land, or the property in the caravan or house-boat, in question and it appears that the main purpose of the disposal and purchase was to obtain relief in respect of interest on the loan or to allow interest on the loan to be treated as a charge on income; or

where the purchaser is directly or indirectly purchasing from a person who is connected with him and the price substantially exceeds the value of what is acquired;

to a rentcharge or, in Scotland, a superiority or the interest of a creditor in a contract of ground annual; or

to the interest of a chargee or mortgagee or, in Scotland, the interest of a creditor in a charge or security of any kind over land.

a covenanted payment F13of a sum of money to charity, as defined in F21section 347A(7); and

a payment which is deductible in computing profits or any description of profits for purposes of corporation tax.

it is made subject to a condition as to repayment, or

the company or a connected person receives a benefit in consequence of making it and either the relevant value in relation to the payment exceeds two and a half per cent of the amount given after deducting tax under section 339(3) or the amount to be taken into account for the purposes of this paragraph in relation to the payment exceeds £250.

where there is one benefit received in consequence of making it which is received by the company or a connected person, the value of that benefit;

where there is more than one benefit received in consequence of making it which is received by the company or a connected person, the aggregate value of all the benefits received in consequence of making it which are received by the company or a connected person.

the relevant value in relation to the payment, and

the relevant value in relation to each payment already made to the charity by the company in the accounting period in which the payment is made which is a qualifying donation within the meaning of this section.

in the case of any company, a statement to the effect that the payment is one out of which the company has deducted tax under subsection (3) above, and

in the case of a close company, a statement to the effect that the payment satisfies the requirements of subsections (3A) to (3E) above.

shall be treated as a relevant payment for the purposes of Schedule 16; and

shall in the hands of the recipient (whether a charity or not) be treated for the purposes of this Act as if it were an annual payment.

deducts out of it a sum representing the amount of income tax on it; and

accounts for that tax in accordance with Schedule 16;

the company, or

a person connected with the company;

under the terms of the contract under which the interest is payable, the interest is to be paid, or may be required to be paid, outside the United Kingdom; and

the interest is in fact paid outside the United Kingdom; and

the trade is carried on by a body of persons over whom the person entitled to the interest has control; or

the person entitled to the interest is a body of persons over whom the person carrying on the trade has control; or

the person carrying on the trade and the person entitled to the interest are both bodies of persons, and some other person has control over both of them.

of any share capital which it owns directly in a body corporate if a profit on a sale of the shares would be treated as a trading receipt of its trade; or

of any share capital which it owns indirectly, and which is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt; or

of any share capital which it owns directly or indirectly in a body corporate not resident in the United Kingdom.

the relationship between two companies is as mentioned in subsection (2) below;

one of the companies makes to the other a payment which, for the purposes of corporation tax, is a charge on income of the company making it; and

in the hands of the company receiving it, the payment is chargeable to tax under Case III of Schedule D.

that one company controls the other; or

that another person controls both companies; or

that one company is a 51 per cent. subsidiary of the other; or

that both companies are 51 per cent. subsidiaries of another company;

corporation tax shall be charged on the profits of the company arising in the winding-up in its final year at the rate of corporation tax fixed or proposed for the penultimate year; but

where the corporation tax charged on the company’s income included in those profits falls to be calculated or reduced in accordance with section 13, it shall be so calculated or reduced in accordance with such rate or fraction fixed or proposed for the penultimate year as is applicable under that section.

references to a company’s final year are references to the financial year in which the relevant event occurs, and references to the company’s penultimate year are references to the last financial year preceding its final year.

corporation tax shall be charged on the profits of the company arising in the administration in its final year at the rate of corporation tax fixed or proposed for the penultimate year, but

where the corporation tax charged on the company’s income included in those profits falls to be calculated or reduced in accordance with section 13, it shall be so calculated or reduced in accordance with such rate or fraction fixed or proposed for the penultimate year as is applicable under that section.

an accounting period shall end on the date assumed and a new accounting period shall begin, and

thereafter, section 12(3) shall apply as if the company had entered administration at the beginning of that new accounting period.

on or at any time within two years after that event the trade or an interest amounting to not less than a three-fourths share in it belongs to the same persons as the trade or such an interest belonged to at some time within a year before that event; and

the trade is not, within the period taken for the comparison under paragraph (a) above, carried on otherwise than by a company which is within the charge to tax in respect of it;

there shall be made to or on the successor in accordance with those Acts all such allowances and charges as would, if the predecessor had continued to carry on the trade, have fallen to be made to or on it; and

in relation to the earlier event “successor” shall include the successor at either event; and

in relation to the later event “predecessor” shall include the predecessor at either event;

in a case where the same body of General Commissioners have jurisdiction with respect to all those companies, by those Commissioners, unless all the companies agree that it shall be determined by the Special Commissioners;

in a case where different bodies of Commissioners have jurisdiction with respect to those companies, by such of those bodies as the Board may direct, unless all the companies agree that it shall be determined by the Special Commissioners; and

in any other case, by the Special Commissioners,

subsection (9) above shall have effect with the substitution for the words following “separate trade” of the words “ any necessary apportionment shall be made of receipts or expenses ”; and

subsection (10) above shall have effect with the substitution for “item” of “ sum ”.

a company (“the predecessor”) ceases to carry on a trade,

another company (“the successor”) begins to carry on the activities of that trade as its trade or as part of its trade,

in the accounting period in which the predecessor ceases to carry on the trade the predecessor would (apart from this section) be entitled under Part 2 of the Capital Allowances Act to a balancing allowance in respect of the trade, and

the predecessor's ceasing to carry on the trade is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to entitle the predecessor to that balancing allowance.

a company (“the predecessor”) ceases to carry on part of a trade,

another company (“the successor”) begins to carry on the activities of that part of the trade as its trade or as part of its trade, and

the predecessor's ceasing to carry on the part of the trade mentioned in paragraph (a) is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to entitle the predecessor, on cessation of the trade, to a balancing allowance in respect of the trade under Part 2 of the Capital Allowances Act.

that part of the trade which the predecessor ceased to carry on is to be treated as a separate trade carried on by the predecessor, and

where the successor carries on the activities of that part of the trade as part of its trade, that part of the successor's trade is to be treated as a separate trade carried on by the successor.

the principal company or companies of the predecessor immediately before the cessation are the same as the principal company or companies of the successor immediately afterwards, and

if any such principal company is a consortium principal company, the relevant fraction in relation to the predecessor immediately before the cessation is the same as the relevant fraction in relation to the successor immediately afterwards (irrespective of whether the members of each consortium are the same).

the predecessor ceases to carry on the whole of its trade, and

that trade is a business of leasing plant or machinery which the predecessor carries on in partnership on the day of cessation.

a trade carried on by two or more persons shall be treated as belonging to them in the shares in which they are entitled to the profits of the trade;

a trade or interest in a trade belonging to any person as trustee (otherwise than for charitable or public purposes) shall be treated as belonging to the persons for the time being entitled to the income under the trust; and

a trade or interest in a trade belonging to a company shall, where the result of so doing is that subsection (1) or (7) of section 343 has effect in relation to an event, be treated in any of the ways permitted by subsection (2) below.

as belonging to the persons owning the ordinary share capital of the company and as belonging to them in proportion to the amount of their holdings of that capital, or

in the case of a company which is a subsidiary company, as belonging to a company which is its parent company, or as belonging to the persons owning the ordinary share capital of that parent company, and as belonging to them in proportion to the amount of their holdings of that capital,

references to ownership shall be construed as references to beneficial ownership;

a company shall be deemed to be a subsidiary of another company if and so long as not less than three-quarters of its ordinary share capital is owned by that other company, whether directly or through another company or other companies, or partly directly and partly through another company or other companies;

the amount of ordinary share capital of one company owned by a second company through another company or other companies, or partly directly and partly through another company or other companies, shall be determined in accordance with section 838(5) to (10); and

where any company is a subsidiary of another company, that other company shall be considered as its parent company unless both are subsidiaries of a third company.

assets which were vested in the predecessor immediately before it ceased to carry on the trade, which were not transferred to the successor and which, in a case where the predecessor was the predecessor on a previous application of section 343, were not by virtue of subsection (9) of that section apportioned to a trade carried on by the company which was the successor on that application; and

consideration given to the predecessor by the successor in respect of the change of company carrying on the trade;

the value of assets (other than money) shall be taken to be the price which they might reasonably be expected to have fetched on a sale in the open market immediately before the predecessor ceased to carry on the trade; and

the amount of liabilities shall be taken to be their amount at that time.