Corporation Tax Act 2009

Publication Date:January 01, 2009
 
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Corporation Tax Act 2009

2009 Chapter 4

An Act to restate, with minor changes, certain enactments relating to corporation tax; and for connected purposes.

[26th March 2009]

Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

1 Introduction

Part 1

Introduction

S-1 Overview of Act

1 Overview of Act

(1) Part 2 of this Act contains basic provisions about the charge to corporation tax including—

(a) the imposition of the charge to corporation tax on the income and chargeable gains of companies (referred to collectively as "profits"), (see section 2)

(b) the exclusion of income and chargeable gains subject to corporation tax from income tax and capital gains tax (see sections 3 and 4)

(c) provision about the territorial scope of the charge to corporation tax (see section 5 and Chapter 4)

(d) provision about how corporation tax is charged and assessed, in particular its charging and assessment by reference to accounting periods (see section 8)

(e) provision about accounting periods (see Chapter 2), and

(f) rules for determining the residence of companies (see Chapter 3).

(2) Under section 2(4) the charge to corporation tax on income has effect in accordance with the provisions of the Corporation Tax Acts that deal with its application, the main provisions of this Act that do so being—

(a) Part 3 (trading income),

(b) Part 4 (property income),

(c) Parts 5 and 6 (profits arising from loan relationships),

(d) Part 7 (profits arising from derivative contracts),

(e) Part 8 (gains in respect of intangible fixed assets),

(f) Part 9 (profits arising from disposals of know-how and sales of patent rights), and

(g) Part 10 (miscellaneous income).

(3) Part 7 also applies the charge to corporation tax on chargeable gains to certain profits arising from derivative contracts.

(4) Parts 5 to 8 also deal with how deficits or losses arising from, or in respect of, the matters to which they relate are brought into account for corporation tax purposes.

(5) The following Parts provide relief for particular types of expenditure—

(a) Part 11 (relief for particular employee share acquisition schemes),

(b) Part 12 (other relief for employee share acquisitions),

(c) Part 13 (additional relief for expenditure on research and development),

(d) Part 14 (remediation of contaminated land), and

(e) Part 15 (film production).

(6) The following Parts contain special rules for particular cases—

(a) Part 15 (film production),

(b) Part 16 (companies with investment business),

(c) Part 17 (partnerships), and

(d) Part 18 (unremittable income).

(7) The following Parts contain provisions of general application—

(a) Part 19 (general exemptions),

(b) Part 20 (general calculation rules), and

(c) Part 21 (other general provisions, including definitions for the purposes of the Act).

(8) For abbreviations and defined expressions used in this Act, see section 1312 and Schedule 4.

2 Charge to corporation tax: basic provisions

Part 2

Charge to corporation tax: basic provisions

Charge to tax on profits

The charge to corporation tax

Charge to tax on profits

S-2 Charge to corporation tax

2 Charge to corporation tax

(1) Corporation tax is charged on profits of companies for any financial year for which an Act so provides

(2) In this Part "profits" means income and chargeable gains, except in so far as the context otherwise requires.

(3) In this Act "the charge to corporation tax on income" means the charge under subsection (1) so far as relating to income.

(4) The charge to corporation tax on income has effect in accordance with the provisions of the Corporation Tax Acts that deal with its application.

S-3 Exclusion of charge to income tax

3 Exclusion of charge to income tax

(1) The provisions of the Income Tax Acts relating to the charge to income tax do not apply to income of a company if—

(a) the company is UK resident, or

(b) the company is not UK resident and the income is within its chargeable profits as defined by section 19.

(2) Subsection (1) does not apply to income accruing to a company in a fiduciary or representative capacity.

S-4 Exclusion of charge to capital gains tax

4 Exclusion of charge to capital gains tax

Capital gains tax is not charged on gains accruing to a company in respect of which the company is chargeable to corporation tax, or would be so chargeable but for an exemption.

General scheme of corporation tax

General scheme of corporation tax

S-5 Territorial scope of charge

5 Territorial scope of charge

(1) A UK resident company is chargeable to corporation tax on all its profits wherever arising.

(2) A non-UK resident company is within the charge to corporation tax only if it carries on a trade in the United Kingdom through a permanent establishment in the United Kingdom.

(3) A non-UK resident company which carries on a trade in the United Kingdom through a permanent establishment in the United Kingdom is chargeable to corporation tax on all its profits wherever arising that are chargeable profits as defined in section 19 (profits attributable to its permanent establishment in the United Kingdom).

(4) Subsections (1) and (3) are subject to any exceptions provided for by the Corporation Tax Acts.

S-6 Profits accruing in fiduciary or representative capacity

6 Profits accruing in fiduciary or representative capacity

(1) A company is not chargeable to corporation tax on profits which accrue to it in a fiduciary or representative capacity except as respects its own beneficial interest (if any) in the profits.

(2) The exception under subsection (1) from chargeability does not apply to profits arising in the winding up of the company.

S-7 Profits accruing under trusts

7 Profits accruing under trusts

Profits that accrue for the benefit of a company under a trust are treated for the purposes of the charge to corporation tax under section 2(1) as accruing directly to the company.

S-8 How tax is charged and assessed

8 How tax is charged and assessed

(1) Corporation tax for a financial year is charged on profits arising in the year.

(2) Corporation tax is calculated and chargeable, and assessments to corporation tax are made, by reference to accounting periods.

(3) Corporation tax which is assessed and charged for an accounting period of a company is assessed and charged on the full amount of profits arising in the accounting period.

(4) Subsection (3) is subject to any contrary provision in the Corporation Tax Acts.

(5) If a company's accounting period falls within more than one financial year, the amount of the profits arising in the accounting period that is chargeable to corporation tax must be apportioned between the financial years in which the accounting period falls.

Accounting periods

Accounting periods

S-9 Beginning of accounting period

9 Beginning of accounting period

(1) An accounting period of a company begins—

(a) when the company comes within the charge to corporation tax, or

(b) immediately after the end of the previous accounting period of the company, if the company is still within the charge to corporation tax.

(2) For the purposes of this section a UK resident company is treated as coming within the charge to corporation tax when it starts to carry on business, if it would not otherwise be within the charge to corporation tax.

(3) If a chargeable gain or allowable loss accrues to a company at a time which is not (ignoring this subsection) within an accounting period of the company—

(a) an accounting period of the company begins at that time, and

(b) the gain or loss accrues in that accounting period.

(4) This section does not apply if section 12 (companies being wound up) applies.

(5) This section is subject to any provision of the Corporation Tax Acts which provides for an accounting period of a company to which this section applies to begin at a different time.

S-10 End of accounting period

10 End of accounting period

(1) An accounting period of a company comes to an end on the first occurrence of any of the following—

(a) the ending of 12 months from the beginning of the accounting period

(b) an accounting date of the company,

(c) if there is a period for which the company does not make up accounts, the end of that period,

(d) the company starting or ceasing to trade,

(e) if the company carries on only one trade, coming, or ceasing to be, within the charge to corporation tax in respect of that trade,

(f) if the company carries on more than one trade, coming, or ceasing to be, within the charge to corporation tax in respect of all the trades it carries on,

(g) the company becoming, or ceasing to be, UK resident,

(h) the company ceasing to be within the charge to corporation tax,

(i) the company entering administration, and

(j) the company ceasing to be in administration.

(2) If subsection (1)(i) applies, the accounting period is treated as having ended immediately before the day on which the company enters administration.

(3) For the purposes of this section a company enters administration—

(a) when it enters administration under Schedule B1 to the Insolvency Act 1986 (c. 45) , or

(b) when it is subject to a corresponding procedure, other than one under that Act.

(4) For the purposes of this section a company ceases to be in administration—

(a) when it ceases to be in administration under Schedule B1 to the Insolvency Act 1986, or

(b) when a...

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