Section 35 | Disallowed credit: use as a deduction

(1)Subsection (2) applies if the application of section 36(2) or 42(2) prevents an amount of credit for foreign tax from being allowable against income tax or corporation tax.

(2)The taxpayer's income is to be treated as reduced by the amount of the disallowed credit.

(3)Subsection (4) applies if the application of section 40(2) prevents an amount of credit for foreign tax from being allowable against capital gains tax.

(4)The taxpayer's chargeable gains are to be treated as reduced by the amount of the disallowed credit.

(5)Subsection (2) or (4) applies only so far as the amount of disallowed credit does not exceed the amount of any loss attributable to the income or gain in respect of which the foreign tax was paid.

(6)For the purposes of subsection (5), payment of the foreign tax is to be taken into account despite section 31(2).