Corporation Tax Act 2009 - Legislation.gov.uk

1 Corporation Tax Act 2009 chapter 4 CONTENTSPART 1 INTRODUCTION1 Overview of ActPART 2 CHARGE TO Corporation TAX: BASIC PROVISIONSCHAPTER 1 THE CHARGE TO Corporation TAXC harge to tax on profits2 Charge to Corporation tax3 Exclusion of charge to income tax4 Exclusion of charge to capital gains taxGeneral scheme of Corporation tax5 Territorial scope of charge6 Profits accruing in fiduciary or representative capacity7 Profits accruing under trusts8 How tax is charged and assessedCHAPTER 2 ACCOUNTING PERIODS9 Beginning of accounting period10 End of accounting periodCorporation Tax Act 2009 (c. 4)ii11 Companies with more than one accounting date12 Companies being wound upCHAPTER 3 COMPANY RESIDENCE13 Overview of Chapter14 Companies incorporated in the United Kingdom15 Continuation of residence established under common law16 SEs which transfer registered office to the United Kingdom17 SCEs which transfer registered office to the United Kingdom18 Companies treated as non-UK resident under double taxation arrangementsCHAPTER 4 NON-UK RESIDENT COMPANIES: CHARGEABLE PROFITSC hargeable profits19 Chargeable profits20 Profits attributable to permanent establishment: introductionThe separate enterprise principle21 The separate enterprise principle22 Transactions treated as being on arm s length terms23 Provision of goods or services for permanent establishment24 Application to insurance companiesThe separate enterprise principle: application to non-UK resident banks25 Non-UK resident banks: introduction26 Transfer of financial assets27 Loans.

2 Attribution of financial assets and profits arising28 Borrowing: permanent establishment acting as agent or intermediaryRules about deductions29 Allowable deductions30 Restriction on deductions: costs31 Restriction on deductions: payments in respect of intangible assets32 Restriction on deductions: interest or other financing costsCHAPTER 5 SUPPLEMENTARY33 Trade includes officeCorporation Tax Act 2009 (c. 4)iiiPART 3 TRADING INCOMECHAPTER 1 INTRODUCTION34 Overview of PartCHAPTER 2 INCOME TAXED AS TRADE PROFITSC harge to tax on trade profits35 Charge to tax on trade profitsTrades and trade profits36 Farming and market gardening37 Commercial occupation of woodlands38 Commercial occupation of land other than woodlands39 Profits of mines, quarries and other concerns40 Credit unionsStarting and ceasing to trade41 Effect of company starting or ceasing to be within charge to Corporation taxTrading income and property income42 Tied premises43 Caravan sites where trade carried on44 Surplus business accommodation45 Payments for wayleavesCHAPTER 3 TRADE PROFITS.

3 BASIC RULES46 Generally accepted accounting practice47 Losses calculated on same basis as profits48 Receipts and expenses49 Items treated as receipts and expenses50 Animals kept for trade purposes51 Relationship between rules prohibiting and allowing deductions52 Apportionment etc of profits and losses to accounting periodCHAPTER 4 TRADE PROFITS: RULES RESTRICTING DEDUCTIONS53 Capital expenditureCorporation Tax Act 2009 (c. 4)iv54 Expenses not wholly and exclusively for trade and unconnected losses55 Bad debts56 Car or motor cycle hire57 Car or motor cycle hire: supplementary58 Hiring cars (but not motor cycles) with low CO2 emissions before 1 April 201359 Patent royalties60 Expenditure on integral featuresCHAPTER 5 TRADE PROFITS: RULES ALLOWING DEDUCTIONSPre-trading expenses61 Pre-trading expensesTenants under taxed leases62 Tenants under taxed leases: introduction63 Tenants occupying land for purposes of trade treated as incurring expenses64 Limit on deductions if tenant entitled to mineral extraction allowance65 Tenants dealing with land as property employed for purposes of trade66 Restrictions on section 63 expenses: lease premium receipts67 Restrictions on section 63 expenses.

4 Lease of part of premisesRenewals68 Replacement and alteration of trade toolsPayments for restrictive undertakings69 Payments for restrictive undertakingsSeconded employees70 Employees seconded to charities and educational establishments71 Educational establishmentsContributions to agents expenses72 Payroll deduction schemes: contributions to agents expensesCounselling and retraining expenses73 Counselling and other outplacement services74 Retraining courses75 Retraining courses: recovery of taxRedundancy payments etc76 Redundancy payments and approved contractual payments77 Payments in respect of employment wholly in employer s trade78 Payments in respect of employment in more than one capacity79 Additional paymentsCorporation Tax Act 2009 (c. 4)v80 Application of section 79 in cases involving partnerships81 Payments made by the GovernmentContributions to local enterprise organisations or urban regeneration companies82 Contributions to local enterprise organisations or urban regenerationcompanies83 Meaning of local enterprise organisation 84 Approval of local enterprise agencies85 Supplementary provisions with respect to approvals86 Meaning of urban regeneration company Scientific research87 Expenses of research and development88 Payments to research associations, universities etcExpenses connected with patents, designs and trade marks89 Expenses connected with patents90 Expenses connected with designs or trade marksExport Credits Guarantee Department91 Payments to Export Credits Guarantee DepartmentLevies under FISMA 200092 Levies etc under FISMA 2000 chapter 6 TRADE PROFITS.

5 RECEIPTSC apital receipts93 Capital receiptsDebts released94 Debts incurred and later releasedAmounts received following earlier cessation95 Acquisition of trade: receipts from transferor s tradeReverse premiums96 Reverse premiums97 Excluded cases98 Tax treatment of reverse premiums99 Arrangements not at arm s length100 Connected persons and property arrangementsCorporation Tax Act 2009 (c. 4)viOther receipts101 Distribution of assets of mutual concerns102 Industrial development grants103 Sums recovered under insurance policies etc104 Repayments under FISMA 2000 chapter 7 TRADE PROFITS: GIFTS TO CHARITIES ETCR elief for certain gifts105 Gifts of trading stock to charities etc106 Meaning of designated educational establishment 107 Gifts of medical supplies and equipmentBenefits associated with gifts108 Receipt of benefits by donor or connected personCHAPTER 8 TRADE PROFITS: HERD BASIS RULESI ntroduction109 Election for application of herd basis rules110 Meaning of animal , herd , production herd etc111 Other interpretative provisionsThe herd basis rules112 Initial cost of herd and value of herd113 Addition of animals to herd114 Replacement of animals in herd115 Amount of receipt if old animal slaughtered under disease control order116 Sale of animals from herd117 Sale of whole or substantial part of herd118 Acquisition of new herd begun within 5 years of sale119 Section 118: sale for reasons outside farmer s control120 Replacement of part sold begun within 5 years of sale121 Section 120: sale for reasons outside farmer s controlElections122 Herd basis elections123 Five year gap in which no production herd kept124 Slaughter under disease control orderPreventing abuse of the herd basis rules125 Preventing abuse of the herd basis rulesCorporation Tax Act 2009 (c.)

6 4)viiSupplementary126 Information if election made127 Further assessment etc if herd basis rules applyCHAPTER 9 TRADE PROFITS: OTHER SPECIFIC TRADESD ealers in securities etc128 Taxation of amounts taken to reserves129 Conversion etc of securities held as circulating capital130 Traders receiving distributions etcBuilding societies131 Incidental costs of issuing qualifying sharesIndustrial and provident societies132 Dividends etc granted by industrial and provident societiesCredit unions133 Annual payments paid by a credit unionDealers in land etc134 Purchase or sale of woodlands135 Relief in respect of mineral royalties136 Lease premiums etc: reduction of receiptsMineral exploration and access137 Mineral exploration and accessCompanies liable to pool betting duty138 Payments by companies liable to pool betting dutyIntermediaries treated as making employment payments139 Deduction for deemed employment payment140 Special rules for partnershipsManaged service companies141 Deduction for deemed employment paymentsWaste disposal142 Deduction for site preparation expenditure143 Allocation of site preparation expenditure144 Site preparation expenditure: supplementaryCorporation Tax Act 2009 (c.

7 4)viii145 Site restoration paymentsCemeteries and crematoria146 Cemeteries and crematoria: introduction147 Deduction for capital expenditure148 Allocation of ancillary capital expenditure149 Exclusion of expenditure met by subsidiesSound recordings150 Revenue nature of expenditure151 Allocation of expenditure152 Interpretation of sections 150 and 151 Reserves of marketing authorities etc153 Reserves of marketing authorities and certain other statutory bodies154 Conditions to be met by reserve fund155 Interpretation of sections 153 and 154 chapter 10 TRADE PROFITS: CHANGES IN TRADING STOCKI ntroduction156 Meaning of trading stock Transfers of trading stock between trade and trader157 Trading stock appropriated by trader158 Trading stock supplied by traderOther disposals and acquisitions not made in the course of trade159 Disposals not made in the course of trade160 Acquisitions not made in the course of tradeRelationship with transfer pricing rules161 Transfer pricing rules to take precedenceCHAPTER 11 TRADE PROFITS: VALUATION OF STOCK ON CESSATION OF TRADE162 Valuation of trading stock on cessation163 Meaning of trading stock 164 Basis of valuation of trading stock165 Sale basis of valuation: sale to unconnected person166 Sale basis of valuation: sale to connected person167 Sale basis of valuation: election by connected persons168 Connected personsCorporation Tax Act 2009 (c.

8 4)ix169 Cost to buyer of stock valued on sale basis of valuation170 Meaning of sale and related expressions171 Determination of questionsCHAPTER 12 DEDUCTIONS FROM PROFITS: UNREMITTABLE AMOUNTS172 Application of Chapter173 Relief for unremittable amounts174 Restrictions on relief175 Withdrawal of reliefCHAPTER 13 DISPOSAL AND ACQUISITION OF KNOW-HOW176 Meaning of know-how etc177 Disposal of know-how if trade continues to be carried on178 Disposal of know-how as part of disposal of all or part of a trade179 Seller controlled by buyer etcCHAPTER 14 ADJUSTMENT ON CHANGE OF BASISA djustment on change of basis180 Application of Chapter181 Giving effect to positive and negative adjustments182 Calculation of the adjustmentExpenses previously brought into account183No adjustment for certain expenses previously brought into accountRealising or writing off assets184 Cases where adjustment not required until assets realised or written offMark to market185 Change from realisation basis to mark to market186 Election for spreading if section 185 applies187 Transfer of insurance businessCHAPTER 15 POST-CESSATION RECEIPTSC harge to tax on

9 Post-cessation receipts188 Charge to tax on post-cessation receipts189 Extent of charge to taxCorporation Tax Act 2009 (c. 4)xMeaning of post-cessation receipts 190 Basic meaning of post-cessation receipt 191 Other rules about what counts as post-cessation receiptsSums treated as post-cessation receipts192 Debts paid after cessation193 Debts released after cessation194 Transfer of rights if transferee does not carry on tradeSums that are not post-cessation receipts195 Transfer of trading stockDeductions196 Allowable deductions197 Further rules about allowable deductionsElection to carry back198 Election to carry back199 Deductions already made are not displaced200 Election given effect in accounting period in which receipt is receivedCHAPTER 16 PRIORITY RULES201 Provisions which must be given priority over this PartPART 4 PROPERTY INCOMECHAPTER 1 INTRODUCTION202 Overview of PartCHAPTER 2 PROPERTY BUSINESSESI ntroduction203 Overview of Chapter204 Meaning of property business Basic meaning of UK and overseas property business205UK property business206 Overseas property businessCorporation

10 Tax Act 2009 (c. 4)xiGenerating income from land207 Meaning of generating income from land 208 Activities not for generating income from landCHAPTER 3 PROFITS OF PROPERTY BUSINESSES: BASIC RULESC harge to tax on profits of a property business209 Charge to tax on profits of a property businessCalculation of profits210 Profits of a property business: application of trading income rules211 Loan relationships and derivative contracts212 Items treated as receipts and expenses213 Certain amounts brought into account under Part 3214 Relationship between rules prohibiting and allowing deductionsCHAPTER 4 PROFITS OF PROPERTY BUSINESSES: LEASE PREMIUMS ETCI ntroduction215 Overview of Chapter216 Meaning of short-term lease Amounts treated as receipts: leases217 Lease premiums218 Amount treated as lease premium where work required219 Sums payable instead of rent220 Sums payable for surrender of lease221 Sums payable for variation or waiver of terms of lease222 Assignments for profit of lease granted at undervalue223 Provisions supplementary to section 222 Other amounts treated as receipts224 Sales with right to reconveyance225 Sale and leaseback transactions226 Provisions supplementary to sections 224 and 225 Additional calculation rule for reducing certain receipts227 Circumstances in which additional calculation rule applies228 The additional calculation rule229 The additional calculation rule: special cases230 Meaning of unused amount and unreduced amount Corporation Tax Act 2009 (c.)