Corporation Tax Act 2010 (c. 4)

[F1 PART 8B U.K. Trading profits taxable at the Northern Ireland rate

Textual Amendments

F1 Pt. 8B inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), s. 1

CHAPTER 3 U.K. Northern Ireland rate applied to Northern Ireland profits and losses

Restricted deductions U.K.

357JJ Restricted deduction: Northern Ireland rate lower than main rate U.K.

(1) The amount of the restricted deduction for a Northern Ireland loss for the purposes of section [F2 357JC(2) or (4), 357JG(2) or 357JHB(2)] is the amount determined under subsection (2) or (3).

(2) If the profit period falls within only one financial year, the amount of the restricted deduction for the loss is—

where—

NIR is the Northern Ireland rate in the financial year;

MR is the main rate in the financial year;

L1 is the amount of the loss that is unmatched;

L2 is the amount of the loss (if any) that is matched.

(3) If the profit period falls within more than one financial year, the amount of the restricted deduction for the loss is—

where—

X is the amount of the loss that is unmatched (“the unmatched loss”), adjusted in accordance with subsection (4);

L2 is the amount of the loss (if any) that is matched.

(4) To adjust the unmatched loss for the purposes of subsection (3), take the following steps—

• Step 1 Apportion the unmatched loss between the financial years on a time basis according to the respective lengths of the parts of the profit period falling within those years.

• Step 2 Where an amount is apportioned under step 1 to a financial year in which the Northern Ireland rate is lower than the main rate, reduce that amount by multiplying it by the following fraction—

  

  where—

  • NIR is the Northern Ireland rate for the financial year;

  • MR is the main rate for the financial year.

• Step 3 Add together each amount reduced under step 2 and each amount apportioned under step 1 but not reduced under step 2.

(5) For the purposes of this section—

(a) an amount of a loss is “matched” if relief in relation to the loss is given against Northern Ireland profits, and

(b) an amount of a loss is “unmatched” if relief in relation to the loss is given against profits that are not Northern Ireland profits.

(6) In this section “the loss” and “the profit period” have the meanings given by section [F3 357JC(1) or (3), 357JG(1) or 357JHB(1)] (as the case may be).]

Textual Amendments

F2 Words in s. 357JJ(1) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 97(a)

F3 Words in s. 357JJ(6) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 97(b)