Corporation Tax Act 2010 section 172

Company A's proportion if shares etc have temporary rights

Section 172 requires an alternative calculation of Company A's proportion of profits or assets where equity holders' rights are capable of changing over time, and applies the lower of the two results.

• Where equity holders' rights to profits or assets on winding up are temporary or capable of changing, an "alternative proportion" must be calculated by assuming those rights are already what they will become at the relevant future time.
• The "relevant future time" is the point after the relevant accounting period at which the rights change, as identified under section 171, and any known arrangements for changes in rights must also be taken into account.
• If the alternative proportion is lower than the proportion that would apply without this section, the alternative proportion is used instead — this ensures the calculation reflects the less favourable outcome for Company A.
• This rule is subject to further modifications under sections 175, 177, 178 and 180, which deal with situations where multiple adjustment rules overlap or where a non-UK resident company is involved.