Section 874 — Corporation Tax Act 2010: Charge to corporation tax

Charge to corporation tax 874 1 The company obtaining the capital sum is to be treated as receiving, at the time the sum is obtained, an amount—

a which is equal to the chargeable amount, and b to which the charge to corporation tax on income applies.

2 The chargeable amount is—

a the amount of the payment for which a deduction by way of relevant tax relief is allowed, or b the total amount of such payments (if more than one).

3 But subsections (1) and (2) have effect subject to—

a subsections (4) to (7),

and b section 875(3) (hire-purchase agreements).

4 The chargeable amount is not to exceed the capital sum (but see section 875(4)).

5 Subsection (6) applies if—

a the charge to corporation tax on income is applied by this section in respect of a capital sum, and b a payment or part of a payment is taken into account in deciding the chargeable amount in respect of the sum.

6 The payment or part must be left out of account in deciding—

a whether the charge to corporation tax on income is to be applied by this section in respect of another capital sum, and b the chargeable amount in respect of the other sum (if the charge is to be applied in respect of the other sum).

7 The order in which subsections (5) and (6) are applied is the order in which capital sums are obtained.