Section 937J — Corporation Tax Act 2010: Tax capacity assumption

Tax capacity assumption 937J 1 This section applies for the purpose of determining whether condition 2 in section 937C is met.

2 Where a member of the relevant group (“ the company ”) makes a scheme loss in an accounting period, the economic profits and losses made by the relevant group in the period must be calculated on the assumption that the company obtained the full tax benefit of the loss.

3 The “full tax benefit” of the loss is the reduction in the corporation tax liability of the company that would result if—

a the loss were brought into account, and b the company's profits chargeable to corporation tax, before doing so, were equal to the debit (or the reduction in any credit) determined by reference to the loss.

4 A reference in this section to bringing a loss into account is to bringing it into account in determining a debit or credit for the purposes of Part 5 of CTA 2009 (loan relationships) or Part 7 of that Act (derivative contracts).