Corporation Tax Act 2010 section 178

Cases in which sections 170, 172 and 174 all apply

Section 178 determines how to calculate company A's share of profits or losses when three special adjustment rules (the first, second and third special rules in sections 170, 172 and 174) all apply simultaneously to the same situation.

• When all three special rules apply at once, the company must test every possible combination of those rules to find the lowest resulting share of profits or losses.
• There are eight possible approaches: applying each rule individually, each pair of rules together, all three rules together, or none of the rules at all.
• Company A's share is taken to be the smallest proportion produced by any of these eight calculations.
• This ensures the most restrictive outcome applies, preventing any combination of the rules from producing a more favourable result than intended.