Corporation Tax Act 2009 section 18J

Companies with total opening negative amount

Section 18J sets out how to determine whether a company that has elected for the foreign permanent establishment exemption has accumulated net losses from its foreign branches (a "total opening negative amount") at the start of the first accounting period to which the exemption applies.

• The calculation looks back over a six-year window, covering the accounting period in which the exemption election is made and any earlier periods ending less than six years before the end of that period
• Starting from the earliest period with a negative result, foreign branch losses and profits (excluding chargeable gains and allowable losses) are aggregated chronologically, but the running total is never allowed to rise above nil
• If the cumulative figure remains negative after processing all periods in the window, the absolute value of that negative figure is the total opening negative amount
• Where a total opening negative amount exists, subsequent sections impose restrictions to prevent the company from benefiting from both past loss relief and the new exemption