Corporation Tax Act 2010 section 423

Adjustment to the basic amount

Section 423 limits the income a partner company recognises on a qualifying change in its partnership interest to a proportion of the basic amount, calculated by reference to the change in the company's percentage share in the partnership on the relevant day.

• The income a partner company recognises under section 417 is capped at the "appropriate percentage" of the basic amount, rather than the full basic amount.
• The appropriate percentage is calculated as the difference between the company's relevant percentage share at the start of the day and its relevant percentage share at the end of the day on which the income is treated as received.
• The "relevant percentage share" means the company's percentage share in the profits or losses of the partnership, as defined in section 415.
• This adjustment ensures that the income recognised reflects only the extent of the reduction in the company's interest in the partnership business on that day.