Section 128 — Corporation Tax Act 2009: Taxation of amounts taken to reserves

Taxation of amounts taken to reserves 128 1 This section applies for the purpose of calculating the profits of a company's trade if—

a the company carries on a banking business, an insurance business or a business consisting wholly or partly of dealing in securities, and b a profit on the sale of securities held by the company would be brought into account in calculating the trading profits of that business.

2 Profits and losses from the securities that in accordance with generally accepted accounting practice are—

a calculated by reference to the fair value of the securities, and b recognised in the company's statement of recognised gains and losses or statement of changes in equity, are brought into account in calculating the profits of the trade.

3 But subsection (2) does not apply—

a to an amount so far as deriving from or otherwise relating to an amount brought into account under that subsection in an earlier period of account, or b to an amount recognised for accounting purposes by way of correction of a fundamental error.

4 In this section “ securities ” includes—

a shares, b rights of unit holders in unit trust schemes to which TCGA 1992 applies as a result of section 99 of TCGA 1992, and c in the case of a company with no share capital, interests in the company possessed by members of the company, but does not include a loan relationship (within the meaning of Part 5).