Section 398E — Corporation Tax Act 2010: Restriction on artificial losses or reductions in profits

Restriction on artificial losses or reductions in profits 398E 1 This section applies if any expenditure incurred by A in carrying on the relevant activity has an unallowable purpose.

2 In calculating the profits or losses of A for any accounting period for the purposes of corporation tax so much of the expenditure as, on a just and reasonable apportionment, is attributable to the unallowable purpose is to be left out of account.

3 Expenditure has an unallowable purpose if the main purpose, or one of the main purposes, of A in incurring it is to obtain a relevant tax advantage (“the unallowable purpose”).

4 A “relevant tax advantage” is—

a a reduction in the profits which, for the purposes of corporation tax, are attributable to the carrying on of the relevant activity by A, b the creation of a loss which, for those purposes, is so attributable, or c an increase in losses which, for those purposes, are so attributable.