Corporation Tax Act 2010 section 956

Apportionment if part of trade treated as separate trade

Section 956 requires just and reasonable apportionments of receipts, expenses, assets and liabilities when part of a trade is treated as a separate trade under sections 954(6) or 955(7), and provides a dispute resolution mechanism where the apportionment affects the tax liability of two or more companies.

• Where part of a trade is treated as a separate trade under section 954(6) or 955(7), just and reasonable apportionments must be made of receipts, expenses, assets and liabilities between the trades.
• The apportionment requirement applies to ensure a fair split of all financial items when a trade is divided for the purposes of the anti-avoidance rules on transfers of trade to obtain balancing allowances.
• If the apportionment is material to the tax liability of two or more companies and a question arises about how it should be made, the dispute is resolved through a process equivalent to an appeal.
• All companies affected by the apportionment are entitled to be a party to the proceedings, ensuring each has the opportunity to present its case.