Taxation (International and Other Provisions) Act 2010

298 Balancing payments between group companies: no tax charge or relief

(1) This section applies if—

(a) one or more financing income amounts of a company (“company A”) for the relevant period of account are—

(i) because of section 293, not brought into account, or

(ii) because of section 296, reduced,

(b) one or more financing expense amounts of another company (“company B”) for the relevant period of account are—

(i) because of section 281, not brought into account, or

(ii) because of section 284, reduced,

(c) company A makes one or more payments (“the balancing payments”) to company B, and

(d) the sole or main reason for making the balancing payments is that the conditions in paragraphs (a) and (b) are met.

(2) To the extent that the sum of the balancing payments does not exceed the amount specified in subsection (3), those payments—

(a) are not to be taken into account in computing profits or losses of either company A or company B for the purposes of corporation tax, and

(b) are not to be regarded as distributions for any of the purposes of the Corporation Tax Acts.

(3) The amount mentioned in subsection (2) is the lower of—

(a) the sum of the financing income amounts mentioned in subsection (1)(a), and

(b) the sum of the financing expense amounts mentioned in subsection (1)(b).