Corporation Tax Act 2010

424The amount of expenseU.K.
This section has no associated Explanatory Notes

(1)This section applies if, as a result of a qualifying change in the partner company's interest in a business on any day—

(a)the company is treated as receiving an amount of income under section 417 on that day,

(b)any other company is treated as incurring an expense under that section on that day,

(c)the other company's percentage share in the profits or loss of the business is greater at the end than at the start of that day, and

(d)the increase (or any part of the increase) is wholly attributable to the change in the partner company's interest in the business.

(2)Except where subsection (4) applies, the amount of the expense of the other company is limited to the appropriate percentage of the amount of the income.

(3)The appropriate percentage is—

where—

OCI is the increase in the other company's percentage share in the profits or loss of the business that is wholly attributable to the change in the partner company's interest in the business, and

PCD is the decrease in the partner company's percentage share in the profits or loss of the business.

(4)If section 417(5) applies (business carried on by the other company alone), the amount of the expense of the other company is equal to the amount of the income.

(5)For the purposes of this section any reference to an increase in the other company's percentage share in any profits or loss of the business includes an increase from a nil share (whether as a result of its becoming a partner or otherwise).