Section 388 | Double taxation relief

From legislation.gov.uk

(1)This section applies where—

(a)apart from this section, an amount (“the relevant amount”) would be a tax-interest income amount brought into account for the purposes of corporation tax in a relevant accounting period (“the relevant accounting period”) of a company, and

(b)the amount of corporation tax chargeable in respect of the relevant amount is reduced under section 18(2) (entitlement to credit for foreign tax reduces UK tax by amount of the credit).

(2)The relevant amount is not a tax-interest income amount to the extent that it consists of notional untaxed income.

(3)For this purpose, the amount of the relevant amount that consists of “notional untaxed income” is—

Formula

\frac{A}{B}

where—

A is the amount of the reduction mentioned in subsection (1)(b);

B is the rate of corporation tax payable by the company, before any credit under Part 2 (double taxation relief), on the company's profits for the relevant accounting period.