Corporation Tax Act 2010 section 686

Meaning of certain expressions in section 685

Section 686 provides definitions and interpretative rules for the terms and expressions used in the apportionment table in section 685(2), which deals with restricting relief for companies with investment businesses following a change in ownership.

• Adjusted non-trading profits and deficits from loan relationships are calculated by stripping out amounts that fall within rows 3 or 4 of the apportionment table, so that those items are not double-counted.
• Condition A applies where loan relationship amounts are determined on an amortised cost basis of accounting and none of the special connected/close company provisions for late interest or deeply discounted securities apply.
• Condition B applies where loan relationship amounts are determined on an amortised cost basis of accounting but one or more of those special connected/close company provisions do apply.
• Management expenses in row 7 of the table exclude any expenses that would be disallowed under the rules governing deductions for investment business management expenses.

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