Taxation (International and Other Provisions) Act 2010 section 422

Group-EBITDA (chargeable gains) election

Section 422 provides an alternative method for calculating the capital disposals adjustment within a group's EBITDA, replacing the standard approach with one based on chargeable gains and allowable losses when a group makes a special election.

• When a group-EBITDA (chargeable gains) election is in effect, the capital disposals adjustment (C) is recalculated as the sum of relevant gains minus the sum of relevant losses, floored at nil
• A relevant gain or loss arises either when a group member disposes of a relevant asset, or when a group member holding a relevant asset leaves the group during the period
• The gain or loss is computed as if all group members were within the charge to corporation tax, the substantial shareholding exemption did not apply, and double taxation relief was disregarded
• Any net excess of relevant losses over relevant gains is carried forward and treated as a relevant loss in the next period of account

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