Section 676AE — Corporation Tax Act 2010: “Affected profits”

“Affected profits” 676AE 1 This section has effect for the purposes of this Chapter.

2 Profits of an accounting period ending after the change in ownership are “affected profits” if and so far as—

a they arise before the 5th anniversary of the end of the accounting period of the transferred company in which the change in ownership occurs, and b they can fairly and reasonably be attributed to activities, or other sources of income, as a result of which, or partly as a result of which, the major change referred to in section 676AA(3) has occurred.

3 If an accounting period of the company begins before, and ends after, the anniversary mentioned in subsection (2), then for the purposes of that subsection—

a the accounting period is treated as two separate accounting periods, the first ending with that date and the second consisting of the remainder of the period, and b the profits or losses of the accounting period are apportioned to the two periods.

4 Any apportionment under subsection (3)(b) is to be made on a time basis according to the respective lengths of the two deemed accounting periods.

5 But if that method of apportionment would work unjustly or unreasonably in any case, such other method is to be used as is just and reasonable.