Section 188BH | Restriction on surrender of losses etc made when UK resident

(1)This section applies in relation to a loss or other amount carried forward to the surrender period if the surrendering company was UK resident during the loss-making period.

(2)The surrendering company may not surrender the loss or other amount under this Chapter so far as the loss or other amount—

(a)is attributable to a permanent establishment through which the company carried on a trade outside the United Kingdom during the loss-making period (see subsection (3)), and

(b)is, or represents, an amount within subsection (5).

(3)A loss or other amount is attributable to a permanent establishment of the surrendering company if (ignoring this section) the amount could be included in the company's surrenderable amounts for the surrender period if those amounts were determined—

(a)by reference to that establishment alone, and

(b)by applying, in relation to that establishment, principles corresponding in all material respects to those mentioned in subsection (4).

(4)The principles are those that would be applied for corporation tax purposes in determining an equivalent loss or other amount in the case of a permanent establishment through which a non-UK resident company carried on a trade in the United Kingdom.

(5)An amount is within this subsection if, for the purposes of non-UK tax chargeable under the law of the territory in which the permanent establishment was situated, the amount is or at any time has been (in any period) deductible from or otherwise allowable against non-UK profits of a person other than the surrendering company.

(6)Subsection (7) applies for the purposes of subsection (5) if, in order to determine if an amount is or at any time has been deductible or otherwise allowable for the purposes of non-UK tax chargeable under the law of a territory, it is necessary under that law to know if the amount (or a corresponding amount) is or has been deductible or otherwise allowable for tax purposes in the United Kingdom.

(7)The amount is to be treated as deductible or otherwise allowable for the purposes of the non-UK tax chargeable under the law of the territory concerned if (and only if) the surrendering company is treated as resident in that territory for the purposes of the non-UK tax.

(8)In this section and section 188BI—

“the loss-making period”, in relation to a loss or other amount, means the accounting period in which the loss was made or the amount arose,

“non-UK tax” has the meaning it has in Part 5 (see section 187), and

“non-UK profits” has the meaning given by section 108.