Section 432 — Corporation Tax Act 2010: Restrictions on relief for Chapter 3 or 4 expenses: introduction

Restrictions on relief for Chapter 3 or 4 expenses: introduction 432 1 Sections 433 and 433A apply if—

a a company is treated as incurring an expense under any provision of Chapter 3 or 4, b the expense arises directly or indirectly in consequence of, or otherwise in connection with, any arrangements, c the main purpose, or one of the main purposes, of the arrangements is to secure that the company is treated as incurring the expense, and d the company makes a loss that wholly or partly derives from the expense. 1A For the purposes of subsection (1), an expense is to be disregarded if, and to the extent that, section 730D(2) (disallowance of deductible amounts: profit transfers) applies to it.

2 The restrictions in section 433 apply in respect of so much of the loss as derives from the expense (in that section and section 433A referred to as “ the restricted loss amount ”).

3 For the purpose of determining how much of a loss derives from the expense, the loss is to be calculated on the basis that the expense is the final amount to be deducted.

4 In this section “ arrangements ” includes any agreement, understanding, scheme, transaction or series of transactions—

a whether or not legally enforceable, and b whether or not the company is a party to the arrangements.