Corporation Tax Act 2009 section 607ZA

Debits referable to times before UK property business etc. carried on

Section 607ZA allows a non-UK resident company to bring pre-commencement derivative contract debits into account for tax purposes when it starts carrying on a UK property business.

• A non-UK resident company may have derivative contract debits arising up to 7 years before it starts its UK property business — these can be brought into account in the accounting period when the business begins
• The debits must not already have been brought into account for tax purposes, and they must be of a type that would have qualified under the derivative contracts rules had the business been running at the time
• Only the net amount is recognised — the pre-commencement debits are reduced by any equivalent credits from the same derivative contract that meet the same conditions, so only the excess is treated as a debit in the first accounting period of the business
• The same treatment applies to derivative contracts held by a non-UK resident company for the purpose of generating other UK property income, as defined in section 5(6) of the Corporation Tax Act 2009