Taxation (International and Other Provisions) Act 2010 section 406

The tax-EBITDA of a company

Section 406 defines how to calculate a company's "tax-EBITDA" — its taxable earnings before interest, taxes, depreciation and amortisation — for the purposes of the corporate interest restriction rules.

• A company's tax-EBITDA for a group period of account is based on its "adjusted corporation tax earnings" for each relevant accounting period falling within that group period.
• Adjusted corporation tax earnings are calculated by totalling amounts brought into account (or which would have been brought into account if the company had sufficient profits) in computing the company's taxable total profits, excluding certain specified amounts set out in section 407.
• Where a company's accounting period overlaps with times outside the group's period of account, or times when the company was not a group member, the amounts must be reduced on a just and reasonable basis to strip out those "disregarded periods".
• The adjusted corporation tax earnings figure can be negative, and amounts can be reduced to nil where they are entirely referable to disregarded periods.

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