Part 17 Manufactured payments and repos

Chapter 4 Further provision about manufactured payments

Manufactured payments under arrangements with unallowable purpose

799 Manufactured payments under arrangements with unallowable purpose
(1) This section applies if—
(a) a manufactured payment falls to be made by a company in an accounting period in pursuance of any arrangements,
(b) the arrangements have an unallowable purpose at any time (see section 800),
(c) any of the manufactured payment is attributable to the unallowable purpose, and
(d) the company is not subject to another relevant tax relief restriction.
(2) The company is not entitled (whether as a result of any provision made in or under this Chapter, or otherwise), to any relevant tax relief, so far as the relief is in respect of, or referable to, so much of the manufactured payment as is attributable to the unallowable purpose.
(3) In this section “relevant tax relief” means—
(a) a deduction in calculating profits or gains for the purposes of corporation tax,
(b) a deduction from total profits,
(c) the bringing into account of any debit for the purposes of Part 5 of CTA 2009 (loan relationships), or
(d) the surrender of an amount by way of group relief.
(4) For the purposes of this section a company is subject to another relevant tax relief restriction if it is not entitled to a relevant tax relief in respect of, or referable to, the whole or any part of the manufactured payment as a result of any of the provisions specified in subsection (5).
(5) The provisions are—
(a) section 76(4)(d) of ICTA (expenses of insurance companies: unallowable purposes),
(b) section 441 of CTA 2009 (loan relationships with unallowable purposes), and
(c) section 1219(2)(b) of CTA 2009 (expenses of management of company's investment business: unallowable purpose).
(6) How far the manufactured payment is attributable to the unallowable purpose must be determined by just and reasonable apportionment.
(7) For the meaning of “arrangements” see section 801(1).