Corporation Tax Act 2010 section 406

Adjustment to the basic amount: consortium relationships

Section 406 adjusts the taxable income amount (the "basic amount") when a qualifying change of ownership is triggered by a change in a consortium relationship under section 394.

• Where the ownership proportion simply decreases during the day, the taxable income is limited to the difference between the start-of-day and end-of-day ownership proportions, applied to the basic amount.
• In all other cases of qualifying ownership change involving a consortium, the taxable income is limited to the ownership proportion at the start of the day, applied to the basic amount.
• The "ownership proportion" refers to a consortium member's percentage share in the lessor company, as defined in section 394.
• The effect is to ensure the income charge is scaled to reflect only the extent of the ownership shift, rather than applying the full basic amount.