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- Point in Time (01/04/2009)
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Version Superseded: 01/04/2010
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(1)This section applies where, in any accounting period of a company resident in the United Kingdom, an amount of unrelieved foreign tax arises in respect of any of the company’s qualifying income from an overseas [F2permanent establishment] of the company.
(2)The amount of the unrelieved foreign tax so arising shall be treated for the purposes of allowing credit relief under this Part as if it were foreign tax paid in respect of, and computed by reference to, the company’s qualifying income from the same overseas [F2permanent establishment]—
(a)in the next accounting period (whether or not the company in fact has any such income from that source in that accounting period), or
(b)in such one or more preceding accounting periods, beginning not more than three years before the accounting period in which the unrelieved foreign tax arises, as result from applying the rules in subsection (3) below,
or partly in the one way and partly in the other.
(3)Where any unrelieved foreign tax is to be treated as mentioned in paragraph (b) of subsection (2) above, the rules for determining the accounting periods in question (and the amount of the unrelieved foreign tax to be so treated in relation to each of them) are that the unrelieved foreign tax must be so treated under that paragraph—
1.that—
(a)credit for, or for any remaining balance of, the unrelieved foreign tax is allowed against corporation tax in respect of income of a later one of the accounting periods beginning as mentioned in that paragraph,
before
(b)credit for any of the unrelieved foreign tax is allowed against corporation tax in respect of income of any earlier such period;
2.that, before allowing credit for any of the unrelieved foreign tax against corporation tax in respect of income of any accounting period, credit for foreign tax is allowed—
(a)first for foreign tax in respect of the income of that accounting period, other than unrelieved foreign tax arising in another accounting period; and
(b)then for unrelieved foreign tax arising in any accounting period before that in which the unrelieved foreign tax in question arises.
(4)For the purposes of this section, the cases where an amount of unrelieved foreign tax arises in respect of any of a company’s qualifying income from an overseas [F2permanent establishment] in an accounting period are those cases where—
(a)the amount of the credit for foreign tax which under any arrangements would, apart from section 797, be allowable against corporation tax in respect of that income,
exceeds
(b)the amount of the credit for foreign tax which under the arrangements is allowed against corporation tax in respect of that income;
and in any such case that excess is the amount of the unrelieved foreign tax in respect of that income.
(5)For the purposes of this section, a company’s qualifying income from an overseas [F2permanent establishment] is the profits of the overseas [F2permanent establishment] which are—
[F3(a)profits, chargeable under Chapter 2 of Part 3 of CTA 2009, of a trade carried on partly, but not wholly, outside the United Kingdom; or]
[F4(b)included in the profits of gross roll-up business chargeable under F5. . . section 436A.]
(6)Where (whether by virtue of this subsection or otherwise) an amount of unrelieved foreign tax arising in an accounting period falls to be treated under subsection (2) above for the purposes of allowing credit relief under this Part as foreign tax paid in respect of, and computed by reference to, qualifying income of an earlier accounting period, it shall not be so treated for the purpose of any further application of this section.]
[F6(7)In this section—
“overseas permanent establishment” means a permanent establishment through which a company carries on a trade in a territory outside the United Kingdom; and
“permanent establishment”—
if there are arrangements having effect under section 788 in relation to the territory concerned that define the expression, has the meaning given by those arrangements, and
if there are no such arrangements, or if they do not define the expression, has the meaning given by section 148 of the Finance Act 2003.]
Textual Amendments
F1Ss. 806L, 806M and cross-heading inserted (with effect in accordance with Sch. 30 para. 23(2)(3) of the amending Act) by Finance Act 2000 (c. 17), Sch. 30 para. 23(1)
F2Words in s. 806L(1)(2)(4)(5) substituted (with effect in accordance with s. 153(4) of the amending Act) by Finance Act 2003 (c. 14), s. 153(1)(a)
F3S. 806L(5)(a) and word substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 255(a) (with Sch. 2 Pts. 1, 2)
F4S. 806L(5)(b) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 53 (with Sch. 7 Pt. 2)
F5Words in s. 806L(5)(b) repealed (1.4.2009 with effect in accordance with s. 1329(1) of the repealing Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 255(b), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)
F6S. 806L(7) substituted (with effect in accordance with s. 155(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 27 para. 1(3)
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