Section 71A | Circumstances in which section 71B applies

(1)Section 71B has effect in relation to an accounting period of a company resident in the United Kingdom which has an overseas permanent establishment (“the PE”) if, in that or any earlier accounting period, condition A or B is met.

(2)Condition A is met in relation to an accounting period if, for the purposes of any tax chargeable under the law of the PE territory—

(a)a loss or other amount attributable to the PE is deducted from or otherwise allowed against amounts of any person other than the company, and

(b)as a result, there is a decrease in the tax chargeable in respect of a foreign taxable period ending in the accounting period.

(3)Condition B is met in relation to an accounting period if—

(a)tax is chargeable under the law of the PE territory in respect of the aggregate profits, or aggregate profits or gains, of the PE and persons other than the company,

(b)a loss or other amount attributable to the PE is deducted from or otherwise allowed against, or is brought into account as a deduction or other allowance in calculating, amounts other than amounts of the PE, and

(c)as a result, there is a decrease in the tax chargeable in respect of a foreign taxable period ending in the accounting period.

(4)In this section—

“foreign taxable period” means any period in respect of which the tax in question is chargeable under the law of the PE territory, and

“the PE territory” means the territory in which the PE is situated.