Corporation Tax Act 2010

[F1 357CG Adjustments in calculating profits of trade U.K.

(1) This section applies for the purposes of determining [F2 under section 357C] the relevant IP profits of a trade of a company for an accounting period.

(2) In calculating the profits of the trade for the accounting period—

(a) there are to be added the amounts in subsection (3), and

(b) there are to be deducted the amounts in subsection (4).

(3) The amounts to be added are—

(a) the amount of any debits which are treated as expenses of the trade by virtue of—

(i) section 297 of CTA 2009 (debits in respect of loan relationships), or

(ii) section 573 of CTA 2009 (debits in respect of derivative contracts), F3 ...

(b) the amount of any additional deduction for the accounting period obtained by the company under Part 13 of CTA 2009 for expenditure on research and development in relation to the trade.

[F4 (c) the amount of any additional deduction for the accounting period obtained by the company under Part 15A of CTA 2009 in respect of qualifying expenditure on a television programme, F5 ...

(d) the amount of any additional deduction for the accounting period obtained by the company under Part 15B of CTA 2009 in respect of qualifying expenditure on a video game][F6 , and

(e) the amount of any additional deduction for the accounting period obtained by the company under Part 15C of CTA 2009 in respect of qualifying expenditure on a theatrical production.]

(4) The amounts to be deducted are [F7 —

(a) the amount of any R&D expenditure credits (within the meaning of Chapter 6A of Part 3 of CTA 2009) brought into account in calculating the profits of the trade for the accounting period, and]

(b) any amounts of finance income brought into account in calculating the profits of the trade for the accounting period.

(For the meaning of “finance income”, see [F8 section 357BG] .)

(5) In a case where there is a shortfall in R&D expenditure in relation to the trade for a relevant accounting period (see section 357CH), the amount of R&D expenditure brought into account in calculating the profits of the trade for that accounting period is to be increased by the amount mentioned in section 357CH(2).

[F9 (5A) In a case where—

(a) the company is—

(i) a television production company in relation to a television programme, or

(ii) a video games development company in relation to a video game, and

(b) there is a shortfall in qualifying expenditure in relation to the separate programme trade or (as the case may be) the separate video game trade for a relevant accounting period (see section 357CHA),

the amount of qualifying expenditure brought into account in calculating the profits of the trade for that accounting period is to be increased by the amount mentioned in section 357CHA(2).]

(6) For the purposes of [F10 subsections (5) and (5A)] —

• [F11 “qualifying expenditure”—

• (a)

  in relation to a company that is a television production company, has the same meaning as in Chapter 3 of Part 15A of CTA 2009, F12 ...

  (b)

  in relation to a company that is a video games development company, has the same meaning as in Chapter 3 of Part 15B of that Act] [F13 , and

  (c)

  in relation to a company that is the production company (as defined in section 1217FC of that Act) in relation to a theatrical production, has the same meaning as in Part 15C of that Act,]

• “R&D expenditure” means expenditure on research and development in relation to the trade,

• “relevant accounting period”, in relation to a company, means—

  (a)

  the first accounting period for which—

  (i)

  the company is a qualifying company, and

  (ii)

  an election under [F14 section 357A(1)] has effect in relation to it, and

  (b)

  each accounting period that begins before the end of the period of 4 years beginning with that accounting period, F15 ...

• “research and development” means activities, other than oil and gas exploration and appraisal, that fall to be treated as research and development in accordance with generally accepted accounting practice.

• [F16 “the separate programme trade”, in relation to a television production company, has the same meaning as in Chapter 2 of Part 15A of CTA 2009 (see section 1216B),

• “the separate video game trade”, in relation to a video games development company, has the same meaning as in Chapter 2 of Part 15B of CTA 2009 (see section 1217B),

• “television production company” has the same meaning as in Part 15A of CTA 2009 (see section 1216AE), F17 ...

• [F18 “theatrical production” has the same meaning as in Part 15C of CTA 2009 (see section 1217FA of that Act), and]

• “video games development company” has the same meaning as in Part 15B of CTA 2009 (see section 1217AB).]]

Textual Amendments

F1 Pt. 8A inserted (with effect in accordance with Sch. 2 paras. 7, 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 2 para. 1(1)

F2 Words in s. 357CG(1) inserted (15.9.2016) by Finance Act 2016 (c. 24), Sch. 9 para. 7(2)

F3 Word in s. 357CG(3)(a) omitted (with effect in accordance with Sch. 18 para. 23 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 18 paras. 18(2), 22; S.I. 2013/1817, art. 2(2); S.I. 2014/1962, art. 2(3)

F4 S. 357CG(3)(c)(d) inserted (with effect in accordance with Sch. 18 para. 23 of the amending Act) by Finance Act 2013 (c. 29), Sch. 18 paras. 18(2), 22; S.I. 2013/1817, art. 2(2); S.I. 2014/1962, art. 2(3)

F5 Word in s. 357CG(3)(c) omitted (with effect in accordance with Sch. 4 para. 17 of the amending Act) by virtue of Finance Act 2014 (c. 26), Sch. 4 paras. 15(2), 16; S.I. 2014/2228, art. 2

F6 S. 357CG(3)(e) and word inserted (with effect in accordance with Sch. 4 para. 17 of the amending Act) by Finance Act 2014 (c. 26), Sch. 4 paras. 15(2), 16; S.I. 2014/2228, art. 2

F7 Words in s. 357CG(4) inserted (with effect in accordance with Sch. 15 para. 27 of the amending Act) by Finance Act 2013 (c. 29), Sch. 15 para. 10(a)

F8 Words in s. 357CG(4) substituted (15.9.2016) by Finance Act 2016 (c. 24), Sch. 9 para. 7(3)

F9 S. 357CG(5A) inserted (with effect in accordance with Sch. 18 para. 23 of the amending Act) by Finance Act 2013 (c. 29), Sch. 18 paras. 18(3), 22; S.I. 2013/1817, art. 2(2); S.I. 2014/1962, art. 2(3)

F10 Words in s. 357CG(6) substituted (with effect in accordance with Sch. 18 para. 23 of the amending Act) by Finance Act 2013 (c. 29), Sch. 18 paras. 18(4)(a), 22; S.I. 2013/1817, art. 2(2); S.I. 2014/1962, art. 2(3)

F11 Words in s. 357CG(6) inserted (with effect in accordance with Sch. 18 para. 23 of the amending Act) by Finance Act 2013 (c. 29), Sch. 18 paras. 18(4)(b), 22; S.I. 2013/1817, art. 2(2); S.I. 2014/1962, art. 2(3)

F12 Word in s. 357CG(6) omitted (with effect in accordance with Sch. 4 para. 17 of the amending Act) by virtue of Finance Act 2014 (c. 26), Sch. 4 paras. 15(3)(a), 16; S.I. 2014/2228, art. 2

F13 Words in s. 357CG(6) inserted (with effect in accordance with Sch. 4 para. 17 of the amending Act) by Finance Act 2014 (c. 26), Sch. 4 paras. 15(3)(a), 16; S.I. 2014/2228, art. 2

F14 Words in s. 357CG(6) substituted (15.9.2016) by Finance Act 2016 (c. 24), Sch. 9 para. 7(4)

F15 Word in s. 357CG(6) omitted (with effect in accordance with Sch. 18 para. 23 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 18 paras. 18(4)(c), 22; S.I. 2013/1817, art. 2(2); S.I. 2014/1962, art. 2(3)

F16 Words in s. 357CG(6) inserted (with effect in accordance with Sch. 18 para. 23 of the amending Act) by Finance Act 2013 (c. 29), Sch. 18 paras. 18(4)(d), 22; S.I. 2013/1817, art. 2(2); S.I. 2014/1962, art. 2(3)

F17 Word in s. 357CG(6) omitted (with effect in accordance with Sch. 4 para. 17 of the amending Act) by virtue of Finance Act 2014 (c. 26), Sch. 4 paras. 15(3)(b), 16; S.I. 2014/2228, art. 2

F18 Words in s. 357CG(6) inserted (with effect in accordance with Sch. 4 para. 17 of the amending Act) by Finance Act 2014 (c. 26), Sch. 4 paras. 15(3)(b), 16; S.I. 2014/2228, art. 2