Section 381 | Set-off of disallowances and reactivations in the same accounting period

(1)This section applies where, as a result of the operation of this Part in relation to different periods of account (whether of the same or a different worldwide group), a company would, apart from this section—

(a)be required to leave out of account one or more tax-interest expense amounts in an accounting period under section 375 or 376, and

(b)be required to bring one or more tax-interest expense amounts into account in that accounting period under section 379.

(2)In this section—

(a)“the gross disallowed amount” means the amount, or total of the amounts, mentioned in subsection (1)(a);

(b)“the gross reactivated amount” means the amount, or total of the amounts, mentioned in subsection (1)(b).

(3)Where the gross disallowed amount is equal to the gross reactivated amount, no tax-interest expense amounts are to be left out of account in the accounting period under this Part or brought into account in the accounting period under this Part.

(4)Where the gross disallowed amount is more than the gross reactivated amount—

(a)the requirement in section 375 or 376 is to leave out of account tax-interest expense amounts that, in total, equal the gross disallowed amount less the gross reactivated amount, and

(b)no amount is to be brought into account in the accounting period under section 379.

(5)Where the gross reactivated amount is more than the gross disallowed amount—

(a)no amount to be left out of account in the accounting period under section 375 or 376, and

(b)the requirement in section 379 is to bring into account the gross reactivated amount less the gross disallowed amount.