Corporation Tax Act 2009 section 18C

Capital allowances etc.

Section 18C sets out how plant and machinery capital allowances, balancing charges, and other claims or elections are handled when a company has elected under section 18A to exempt the profits or losses of its foreign permanent establishments.

• Notional plant and machinery allowances and balancing charges for assets used in a foreign permanent establishment are calculated automatically and reflected in the branch profit or loss computation for each accounting period after the election takes effect.
• Where a disposal event arises solely because of the section 18A election, the value used for both the deemed disposal and the deemed reacquisition of plant and machinery is the tax written-down value (the "transition value"), rather than market value.
• Profits or losses from plant or machinery leases where the company (or a connected company) has already received actual capital allowances on the leased assets are excluded from the exempt branch profit or loss calculation, so that those leasing results remain within the charge to corporation tax.
• When calculating foreign tax credits under TIOPA 2010 for the purposes of the exemption, the company is assumed to have made every available claim or election (other than plant and machinery capital allowance claims) that would reduce its branch profits or increase its branch losses.