Section 676AE | “Affected profits”

(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.