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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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Corporation Tax: change of ownership: companies with investment business: apportionment of ‘amounts in issue’

CTA2010/S685 and S686

The amounts in issue for which an apportionment is required under CTA2010/S678 (CTM08770) are listed at CTA2010/S685. The amounts, and the manner of apportionment, are as follows:

1 The amount for the actual accounting period of any adjusted non-trading profits from the company’s loan relationships (see section 686(2)). Apportion on a time basis according to the respective lengths of the two notional accounting periods.
     
2 The amount for the actual accounting period of any adjusted non-trading deficit from the company’s loan relationships (see section 686(3)). Apportion on a time basis according to the respective lengths of the two notional accounting periods.
3 The amount of any non-trading debit that falls to be brought into account for the actual accounting period for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of any debtor relationship of the company. (1) If condition A in section 686(4) is met, apportion by reference to the time of accrual of the amount to which the debit relates.
    (2) If condition B in section 686(5) is met, apportion to the first notional accounting period.
4 The amount of any non-trading deficit carried forward to the actual accounting period under section 457(1) of CTA 2009 (basic rule for deficits: carry forward to accounting periods after deficit period). Apportion the whole of the amount to the first notional accounting period.
5 The amount of any non-trading credits or debits in respect of intangible fixed assets that fall to be brought into account for the actual accounting period under section 751 of CTA 2009 (non-trading gains and losses), but excluding any amount within 6 below. Apportion to each notional accounting period the credits or debits that would fall to be brought into account in that period if it were a period of account for which accounts were drawn up in accordance with generally accepted accounting practice.
6 The amount of any non-trading loss on intangible fixed assets carried forward to the actual accounting period under section 753(3) of CTA 2009 and treated under that section as if it were a non-trading debit of that period. Apportion the whole of the amount to the first notional accounting period.
7 The amount of any expenses of management referable to the actual accounting period within the meaning of Chapter 2 of Part 16 of CTA 2009 (companies with investment business) (but see section 686(6)). Apportion to each notional accounting period the amounts that would fall to be brought into account in that period as a if it were a period of account for which accounts were drawn up in accordance with generally accepted accounting practice.
8 The amount of any excess carried forward under section 1223 of CTA 2009 (expenses of management carried forward) to the actual accounting period. Apportion the whole of the amount to the first notional accounting period.
9 The amount of any allowances falling to be made for the actual accounting period as a result of section 253 of CAA 2001 which would (but for this Chapter) be added to the expenses of management for the period because of section 1233 of CTA 2009 (excess capital allowances). Apportion the amount on a time basis according to the respective lengths of the two notional accounting periods.
10 Any other amounts by reference to which the profits or losses of the actual accounting period would be calculated. Apportion the amount on a time basis according to the respective lengths of the two notional accounting periods.
     

If any method of apportionment would work unjustly or unreasonably , use any other method that is just and reasonable.