Corporation Tax Act 2010 section 703

Meaning of certain expressions in section 702

Section 703 defines key terms and expressions used in the apportionment table in section 702, including how to calculate adjusted non-trading profits and deficits from loan relationships, and when certain accounting conditions apply.

• Adjusted non-trading profits from loan relationships are calculated by taking the taxable profits and stripping out any amounts that fall within rows 4 or 5 of the section 702 table (broadly, debits or credits from impairment or release of connected-party or relevant group debts).
• Adjusted non-trading deficits from loan relationships are similarly calculated by removing the row 4 or 5 amounts from the deficit figure that would otherwise arise.
• Two conditions govern the treatment of row 4 amounts: Condition A applies where the amount is determined on an amortised cost basis and none of the special timing rules for late interest or deeply discounted securities apply; Condition B applies where the amortised cost basis is used but one or more of those special timing rules does apply.
• Management expenses included in row 8 of the table exclude any expenses that would be disallowed under the capital expenditure restriction in section 1219(3)(b) of CTA 2009.