Corporation Tax Act 2009 section 400B

Interpretation of section 400A: economic profits and losses

Section 400B defines the key terms "economic profit or loss" and "pre-tax economic profit or loss" as used in section 400A, which deals with adjustments for changes in index-linked hedging schemes.

• An "economic" profit or loss includes both unrealised and realised profits and losses, giving a comprehensive measure of financial performance over a period
• For a group of companies, the economic profit or loss is determined by considering all members of the group together as a whole
• When calculating a group's economic profit or loss, each member's results are computed over the same period, even if that period does not align with a particular member's own accounting period
• A "pre-tax" economic profit or loss is one calculated without taking into account any gain or loss arising from the operation of the Corporation Tax Acts